Multifamily Securitization Overview. As of September 30, 2017

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1 Multifamily Securitization Overview As of September 30, 2017

2 Table of Contents Executive Summary Freddie Mac Multifamily Business Multifamily Market Overview Freddie Mac Multifamily Production, Sales and Underwriting Freddie Mac Multifamily Initiatives Freddie Mac Multifamily Securitization Program Freddie Mac Multifamily Competition Freddie Mac Multifamily Investor Resources Appendix I: Freddie Mac Multifamily Recent Transaction Highlights..... Appendix II: Freddie Mac Multifamily Team MULTIFAMILY SECURITIZATION Freddie Mac 2

3 Executive Summary Freddie Mac s Core Mission is to provide Liquidity, Stability and Affordability to the US Housing Market The multifamily market has experienced very strong rent and occupancy trends over the last few years and the demand for rental housing is expected to continue to rise. The multifamily sector continues to experience strong investor interest and outperforms other commercial real estate sectors Our business model underwent a significant shift from an investments business to a securitization business beginning in 2008 This shift has been successful: Securitization enables us to transfer virtually all credit risk to third parties, thereby reducing our reliance on the retained portfolio and government backstop guarantee, our guarantee comes before draw As part of our business strategy to be innovative and provide thought leadership, we continue to expand our support of affordable housing through new offerings such as small balance, manufactured housing community loans and tax-exempt loans, as well as green financing MULTIFAMILY SECURITIZATION Freddie Mac 3

4 Freddie Mac Multifamily Business 4

5 Freddie Mac Multifamily Business Key Facts Freddie Mac s Core Mission is to provide Liquidity, Stability and Affordability to the US Housing Market The Multifamily Line of Business of Freddie Mac helps to ensure an ample supply of affordable rental housing by purchasing mortgages secured by apartment buildings with five or more units Freddie Mac buys loans from a network of approved Multifamily Seller/Servicers that have over 150 branches nationwide, substantial lending experience and established performance records Freddie Mac follows a prior-approval underwriting approach and completes the underwriting and credit reviews of all multifamily mortgages in-house Multifamily employs almost 900 experienced professionals at its headquarters, four regional offices and eight field offices Freddie Mac has provided nearly $498 billion in financing for approximately 77,000 multifamily properties since 1993, representing around 8,619,000 apartment units Freddie Mac s Multifamily total portfolio of $255.8 billion is comprised of $184.2 billion of multifamily guarantees, $39.4 billion of whole loans, $9.2 billion of multifamily investment securities and $23.0 billion of multifamily unguaranteed securities. MULTIFAMILY SECURITIZATION Freddie Mac 5

6 Freddie Mac Multifamily Business 2017 Q3 Review YTD 2017 New Business Volume (based on UPB) YTD 2017 New Business Volume (based on # of loans) YTD 3Q17 Purchase UPB YTD 3Q17 Loan Purchases 7% 2% 1% 1% Held for Sale Held for Investment Bond CE TEBS Swap 65% 35% Refinances Acquisitions 89% Freddie Mac Multifamily funded $19.0 billion in new business volume during 2017 Q3, which provided financing for approximately 1,700 multifamily properties, representing approximately 198,000 rental units $16.2 billion of multifamily loans were securitized into K-Deals and SB-Deals during 2017 Q3 Freddie Mac s credit enhanced portfolio delinquency rate was 2 basis points as of September 30, 2017 Freddie Mac s K-Deal and SB-Deal delinquency rate was 2 basis points as of September 30, 2017 Freddie Mac has not realized any credit losses on K-Deal and SB-Deal guarantees since inception MULTIFAMILY SECURITIZATION Freddie Mac 6

7 Freddie Mac Multifamily Business Results We maintain strong credit and capital management discipline and generate solid returns Key Metrics FY 2016 YTD 3Q17 New business volume $56.8 billion $45.8 billion Percentage excluded from volume cap 36% 54% Units financed ~ 739,000 units ~530,000 units Securitization volume $52.2 billion $40.8 billion Comprehensive income, net of taxes $1.6 billion $1.3 billion Total portfolio balance* $232 billion $256 billion Credit losses $2 million $3 million 60+ day delinquency rate 3 bps 2 bps REO inventory none 2 properties *Includes unguaranteed securities MULTIFAMILY SECURITIZATION Freddie Mac 7

8 Freddie Mac Multifamily New Business Volume We provide financing in all multifamily markets; our volumes have grown in line with the overall market growth $56.8B $47.3B $45.8 $21.6B $24.0B $20.3B $28.8B $25.9B $28.3B $13.0B $16.6B $15.4B YTD 2017 MULTIFAMILY SECURITIZATION Freddie Mac 8

9 Purchase Volume by Product We continue to support the needs of the rental housing market across communities nationwide and have increased our presence in underserved markets Annual Funding ($ in billions) 2016 YTD 2017 New Business Volume Targeted Affordable Housing (TAH) $6.3 $6.0 Conventional $50.5 $39.8 Total $56.8 $45.8 Key Products Small Balance Loans (SBL) $4.5 $5.1 Structured Deals $4.7 $3.1 Manufactured Housing Communities (MHC) $1.0 $0.5 Senior Housing $3.2 $2.0 Student Housing $1.6 $1.1 Green Advantage $3.0 $12.2 MULTIFAMILY SECURITIZATION Freddie Mac 9

10 Multifamily Delinquency Rates Our disciplined credit practices are one of the main drivers of the continued strong performance of our offerings Sources: Freddie Mac, Fannie Mae, TREPP (CMBS multifamily 60+ delinquency rate, excluding REOs), American Council of Life Insurers (ACLI) Quarterly Investment Bulletin and FDIC Quarterly Banking Profile MULTIFAMILY SECURITIZATION Freddie Mac 10

11 Multifamily Market Overview 11

12 Fundamental Themes and Observations Solid fundamentals and continued economic strength are expected to propel the multifamily market in 2017 The U.S. has a housing shortage Housing demand has outpaced supply since the Great Recession Overall housing supply is well below the long-run average; multifamily is helping to fill the housing void Rental households are projected to grow as household formation is also poised to accelerate Oversupply appears to be highly localized by submarket, property class and asking rents Multifamily property values seem fair and not inflated due to excess leverage or irrational expectations Housing affordability is becoming a significant problem Multifamily debt is becoming more liquid in the recent years Broader demographic, economic and social trends all appear to be favorable for multifamily market MULTIFAMILY SECURITIZATION Freddie Mac 12

13 Rental Demand Keeps Rising More households show a preference for rental housing Owner and Renter Households and Homeownership Rate (1990-3Q 2017) 70% 69% 68% 67% 66% 65% 64% 63% 62% 61% 60% Owner Occupied Renter Occupied Homeownership Rate Source: U.S. Census Bureau, Current Population Survey/Housing Vacancy Survey, Freddie Mac MULTIFAMILY SECURITIZATION Freddie Mac 13

14 Multifamily Fundamentals are Healthy Multifamily market is moderating but remains healthy vacancy rates are below long-term historical averages and effective rent growth remains positive 10.0% Vacancy Rate and Change in Effective Rent 8.0% 6.0% 5.8% 4.0% 4.7% 4.2% 3.8% 3.2% 3.0% 2.6% 2.4% 2.0% 0.0% -2.0% -4.0% -2.5% Change in Effective Rents Vacancy Rate Source: REIS MULTIFAMILY SECURITIZATION Freddie Mac 14

15 (Q3) MF Permits, Starts and Completions (thousands) Renter Occupied Housholds (millions) Multifamily Fundamentals (continued) Slowing of construction permits compared to 2015 and strong renter demand are signs that the market is stable 700 Multifamily Permits, Starts and Completions (5+ Units) and Renter Households MF Permits MF Starts MF Completions Renter Occupied Sources: Moody s Analytics DataBuffet.com and U.S. Census Bureau Notes: Starts and completions based on all areas of the U.S., while permits are only for areas that require a building or zoning permit. Moody s Analytics estimated that in 2000, 95% of population was living in a permit issuing area. MULTIFAMILY SECURITIZATION Freddie Mac 15

16 RATIO OF COMPLETIONS TO HOUSEHOLDS Housing Shortage Housing completions are well below the long-run average; the multifamily market is helping to fill the void Housing Completions to Total Households (SF & MF) 2, % 2,000 1,500 1, % 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% TOTAL HOUSING COMPLETIONS (SF & MF) COMPLETIONS TO HOUSEHOLDS LONG-RUN AVERAGE COMPLETIONS TO HOUSEHOLDS Sources: Moody s MULTIFAMILY SECURITIZATION Freddie Mac 16

17 2017 Renter Survey*: Young Millennials and Boomers More Likely to Say Renting Fits Their Lifestyle Q: Following are several pairs of statements. For each pair, please select the point on the scale that best reflects your opinion.. Renting fits my current lifestyle Attitudes Towards Renting % (2,1 Ratings Top Favorable Ratings for the Statement) Owning a home fits within my current lifestyle Buy 58% Renting Fits My Current Lifestyle % (4,5 Ratings Top Favorable Ratings for the Statement) 63% 47% 56% 63% Young Millennial (Age 21-27) Older Millennial (Age 28-37) Gen X (Age 38-52) Baby Boomer (Age 53-71) *2017 August Harris Poll General Consumer Quick Query Omnibus Results (Base = Total Renters) MULTIFAMILY SECURITIZATION Freddie Mac 17

18 TREASURY, SPREAD AND CAP RATE MULTIFAMILY VALUE INDEX Multifamily Cap Rates and U.S. Treasuries The current risk premium demanded to hold real estate is around historically average levels. Cap rate compression is a result of property value increase since 2009, with the market benefitting from improved access to real estate debt capital 10% 9% Cap Rate Spread (left) MF Value Index (Right) 1.6 8% 7% Treasury Rate (left) 1.2 6% 5% 0.8 4% 3% 0.4 2% 1% 0% 0.0 Sources: Moody s REAL Commercial Property Price Index (CPPI) and Real Capital Analytics (RCA) MULTIFAMILY SECURITIZATION Freddie Mac 18

19 Multifamily Mortgage Originations Originations have been rising over the last few years, reflecting solid market fundamentals $350 Multifamily Mortgage Originations ($ Billions) $300 $250 $250 $290 $269 $200 $150 $100 $50 $ (F) OTHER CMBS FANNIE MAE FREDDIE MAC LIFE INSURERS Sources: Freddie Mac 10-Ks, 10-Qs, FHFA Report to Congress, and Freddie Mac's internal reports, Fannie Mae 10-Ks, 10-Qs, FHFA Report to Congress, and Fannie Mae's Multifamily Monthly New Business Volumes, ACLI, Wells Fargo Securities LLC, Intex Solutions Inc., Mortgage Bankers Association and Freddie Mac internal research MULTIFAMILY SECURITIZATION Freddie Mac 19

20 Freddie Mac Multifamily Production, Sales and Underwriting 20

21 Our Seller/Servicer Network Freddie Mac buys loans from a network of approved Multifamily Seller/Servicers that have over 150 branches nationwide, substantial lending experience and established performance records Seller/Servicers The small size of the network promotes quality originations and a high level of service to lenders and borrowers Arbor Agency Lending LLC Barings Multifamily Capital LLC Basis Investment Group, LLC Community Preservation Corporation Grandbridge Real Estate Capital LLC Pillar Financial, a division of SunTrust Bank Pinnacle Bank PNC Real Estate - Multifamily Bellwether Enterprise Real Estate Capital LLC Greystone Servicing Corporation Prudential Affordable Mortgage Company Our Seller/Servicers must comply with our standards for both origination and servicing of multifamily loans, which includes meeting minimum financial requirements and undergoing satisfactory annual audits Berkadia Commercial Mortgage LLC Berkeley Point Capital LLC Capital One Multifamily Finance LLC CBRE Capital Markets Citibank N.A. Holliday Fenoglio Fowler LP Hunt Mortgage Group Jones Lang LaSalle LLC KeyBank NA M&T Realty Capital Corporation NorthMarq Capital ReadyCap Commercial LLC Red Mortgage Capital LLC RICHMAC Funding LLC Sabal TL1 LLC Walker & Dunlop LLC Wells Fargo Multifamily Capital MULTIFAMILY SECURITIZATION Freddie Mac 21

22 Production, Sales & Underwriting Locations Regional focus means we have presence, experience, and knowledge of local markets The Multifamily Production and Underwriting teams are situated throughout the country to promote market expertise and provide better customer service WESTERN REGION CENTRAL REGION SOUTHEAST REGION NORTHEAST REGION 444 S Flower St 44th Floor Los Angeles, CA (213) W Wacker Dr Suite 2500 Chicago, IL (312) Jones Branch Dr McLean, VA (703) Park Ave 16th Floor New York, NY (212) FIELD OFFICE LOCATIONS Atlanta, GA Austin, TX Dallas, TX Denver, CO Fort Lauderdale, FL Houston, TX Irvine, CA Seattle, WA MULTIFAMILY SECURITIZATION Freddie Mac 22

23 % of Units Acquired Financing Affordable Units Approximately 83% of the total eligible units financed by Freddie Mac YTD 3Q17 are affordable to low- or moderate-income families (100% of Area Median Income ( AMI ) or below) 5% 3% 3% 5% 4% 6% 6% 4% 5% 5% 6% 6% 6% 8% 14% 13% 15% 14% 16% 14% 18% 9% 8% 17% 37% 41% 37% 39% 41% 39% 40% 36% 83% 24% 25% 26% 19% 20% 20% 16% 16% 14% 12% 16% 17% 13% 15% 12% 14% % AMI or less >50%-60% AMI >60%-80% AMI >80%-100% AMI >100%-120% AMI >120% AMI Note: The numbers above represent the percentage of affordable units at each AMI threshold. Totals may not add up to 100% due to rounding MULTIFAMILY SECURITIZATION Freddie Mac 23

24 Our Credit Philosophy Our credit policy and consistent underwriting practices are one of the main drivers of our strong Freddie Mac Multifamily offerings performance Freddie Mac makes all credit, structuring, and pricing decisions working with Seller/Servicers during all aspects of the mortgage manufacturing process We are focused on: Sustainable Cash Flow Market Knowledge & Fundamentals Equity Definable Exit Strategy Sponsorship Quality Real Estate Collateral Underwriting teams are situated throughout the country to provide market expertise Each loan goes through full underwriting and credit approval processes MULTIFAMILY SECURITIZATION Freddie Mac 24

25 Our Credit Approval Process START Seller submits loan request to Production Loan is APPROVED, rate-locked and funded Production sizes, structures and submits loan for pricing Production presents deal to Regional Underwriting for approval to quote < $100MM approval to quote determined by Senior Regional Underwriting Director >$100MM - $350MM approved by Senior Vice President of Multifamily Underwriting & Credit >$350MM approved by Vice President of Enterprise Commercial Real Estate Risk Borrower completes loan application and Seller submits underwriting package Underwriter completes due diligence process, reports findings in investment brief Underwriter recommends loan for approval Up to $50MM approval level determined by Senior Regional Underwriting Director $50 - $100MM approved by Vice President of Multifamily Underwriting $100 - $350MM approved by Senior Vice President of Multifamily Underwriting & Credit >$350MM - $500MM approved by Vice President of Enterprise Commercial Real Estate Risk As a general rule, transactions over $50MM UPB or that have exceptions to Freddie Mac s Credit Policy that impact coverage, leverage, or maturity risk parameters must receive a higher level of approval. Loan requests from $500MM - $750MM also approved by CEO and Executive Vice President Chief Enterprise Risk Officer Loan requests > $750MM also approved by Freddie Mac Risk Committee of the Board of Directors Final approval may be delegated for loans that obtained formal quote approval at levels above Senior Vice President of Multifamily Underwriting & Credit if there is no material change during underwriting Pooled transactions > $150MM for crossed and > $500MM for uncrossed require elevated levels of credit approval MULTIFAMILY SECURITIZATION Freddie Mac 25

26 K-Deal Mortgage Guidelines The following are the general guidelines for Freddie Mac s Multifamily mortgage purchases that are intended for K-Deal securitization (subject to certain exceptions): Property Type Origination requirements are focused on loans secured by occupied, stabilized and completed multifamily properties Limited amount of seniors housing, student housing, cooperative housing, manufactured housing and Section 8 HAP contracts Mortgages are fixed rate or floating rate 5-, 7-, 10- and year loan terms with a maximum amortization of 30 years Loan Terms May contain initial interest-only periods of 1-5 years Moderate exposure to full term interest-only loans Full term interest-only loans require higher initial amortizing debt service coverage ratio (DSCR) and lower loan to value (LTV) Floating rate mortgages are based on 1-month LIBOR, generally require a third party LIBOR cap and are sized using an equivalent fixed rate Single purpose entity (SPE) is required for all loans greater than or equal to $5 million Borrowers A carve-out guarantor is generally required Entity guarantors are acceptable but may require financial covenants or a material adverse change clause Established large institutional borrowers with substantial prior experience with Freddie Mac mortgage programs may have more customized documents MULTIFAMILY SECURITIZATION Freddie Mac 26

27 K-Deal Mortgage Guidelines (cont d) Effective gross income is calculated based on trailing 3-months actual rent collections or the annualized current rent roll minus a minimum 5% vacancy rate subject to submarket data and actual rent collections Operating expenses are generally calculated based on trailing 12 months Real estate taxes and insurance are based on actual annual expenses Underwriting Property values are based on third-party appraisals and internal value confirmation Replacement reserves are typically required and are generally equal to the greater of an engineer s recommendation or $250/unit or $50/pad for Manufactured Housing Communities. Tax and insurance escrows are generally required Third party LIBOR caps that expire prior to related mortgage maturity date are required to be replaced. Replacement cap funds are escrowed at 125% of replacement cost and are recalculated on either a semi-annual or annual basis Other third-party reports are required (e.g., Phase I ESA, property condition, zoning, etc.) LTV and DSCR Maximum LTV of 80%, minimum DSCR of 1.25x (fixed rate) and 1.00x on the max capped interest rate for floating-rate loans Shorter loan terms, tertiary or underperforming markets, and specialty product types typically require adjustments All loans require a maturity risk analysis Eligible one year after origination of the first mortgage Purchased by Freddie Mac from original Seller/Servicer under Freddie Mac s supplemental mortgage product Supplemental Financing Lower of 80% LTV or maximum LTV per Loan Agreement and minimum amortizing DSCR of 1.25x (fixed) or 1.10x (floating, at cap) Re-underwriting required based on current property performance, an updated appraisal and financials and Freddie Mac s credit policy Monthly escrows for taxes, insurance and replacement reserves required. If the first mortgage allowed for deferral of escrows, the supplemental will trigger collection. MULTIFAMILY SECURITIZATION Freddie Mac 27

28 Freddie Mac Multifamily Initiatives 28

29 Other Risk Transfer and Financing Initiatives Freddie Mac Multifamily continues to add new risk transfer vehicles that complement our K-Deals and SB- Deals SUPPLEMENTAL LOAN INVESTMENT FUNDS $2.1 BILLION IN FUNDS Transfers first loss risk on to-be-issued Freddie Mac KJ securitizations AGGREGATION RISK TRANSFER CERTIFICATES (KT-DEALS) $1.0 BILLION IN 1Q 2017 FIRST TRANSACTION Transfers risk on loans awaiting securitization STRUCTURED CREDIT RISK (SCR) NOTES $1.8 BILLION IN TRANSACTIONS Provides synthetic risk transfer structure typically for certain targeted affordable loans WHOLE LOAN INVESTMENT FUNDS NEW FOR 2017 Vehicle to transfer risk on less liquid loans e.g. value add, moderate rehabilitation TAX-EXEMPT LOAN SECURITIZATION (ML-DEALS) $324 MILLION IN 2Q 2017 FIRST TRANSACTION Transfers first loss risk on tax-exempt loans MULTIFAMILY SECURITIZATION Freddie Mac 29

30 Freddie Mac Multifamily Securitization Program 30

31 Multifamily Securitization Program Securitization is accomplished through offerings of K-Series Multifamily Mortgage Pass-Through Certificates K-Deals, SB-Series Multifamily Mortgage Pass-Through Certificates SB-Deals and similar securitization transactions In Q3 2017, approximately 87 percent of Freddie Mac s multifamily mortgage purchases were designated for securitization In general, K-Deals are backed by newly acquired mortgages underwritten through Freddie Mac s securitization platform. Underwriting and credit reviews are completed by Freddie Mac, and securitized loans are underwritten to the same standards as loans held in our investment portfolio Freddie Mac Multifamily announced the addition of the Small Balance Loans ( SBL ) line of business to its lending platform in October 2014 and securitized its first SB-Deal in SBL generally refers to loans between $1-6 million and properties with 5-50 units (up to $7.5 million and 5-75 units in Top and Standard SBL Markets) In January 2017, Freddie Mac introduced its first aggregation period risk transfer transaction, known as KT-Deal, as a credit risk transfer vehicle for loans awaiting securitization. The size of the KT01 deal was approximately $1 billion As of September 31, 2017, there has been approximately:» $210.4 billion of K-Deal issuance since the start of the program in 2009» $9.4 billion of SB-Deal issuance since the start of the program in 2015 MULTIFAMILY SECURITIZATION Freddie Mac 31

32 Multifamily Securitization Program Strengths Freddie Mac is an active and consistent issuer of high-grade multifamily securities, featuring transparency and consistency on collateral and deal information STRONG PERFORMANCE K-Deals are secured by assets with some of the industry s lowest delinquency and vacancy rates, along with other strong property fundamentals TRANSPARENCY & CONSISTENCY on collateral and deal information via Multifamily Securities Investor Access Tool STRONG CREDIT provided by Freddie Mac s guarantee plus credit support of underlying mortgages underwritten to Freddie Mac s portfolio standards SERVICING STANDARD improves the Borrower experience post-securitization LIQUIDITY supported by expectations for repeatable and reliable issuance subject to market conditions CALL PROTECTION associated with defeasance or yield maintenance DIVERSIFICATION through pooled risk of many assets versus single asset risk in a typical deal MULTIFAMILY SECURITIZATION Freddie Mac 32

33 Servicing Standard - Best-in-Class Service The Freddie Mac Servicing Standard ensures that we are delivering best-in-class service throughout the life of the loan Freddie Mac has used its Multifamily Seller/Servicer Guide to outline its Servicing Standard and expanded it in 2012 to directly refer to it as the Servicing Standard in each Pooling and Servicing Agreement (PSA) This standard ensures transparency and on-going communication between all post-securitization transaction parties SPECIAL SERVICERS We partner with all of the parties involved with each loan postsecuritization to ensure that they protect the Freddie Mac brand Freddie Mac is not a credit decisionmaker but is monitoring the process Freddie Mac acts as the Servicing Consultant to help create a shared credit philosophy and consistent processes» Provides an analysis of what Freddie Mac would do under our credit guidelines when asked by the Master Servicer MULTIFAMILY SECURITIZATION Freddie Mac 33

34 Multifamily Securitization Volume (2009 Sep 2017) Our K-Deal program has seen unprecedented growth as we continue to diversify our product execution options TOTAL (IN BILLIONS) Total UPB K-Deals SB-Deals Q-Deals ML-Deals The vast majority of our securitization volume is workforce housing loans. The K-W workforce housing deal type is a securitization type we are considering on a limited basis for certain types of workforce housing and represents only a small subset of our overall workforce housing volume. MULTIFAMILY SECURITIZATION Freddie Mac 34

35 Multifamily Securitization Volume (Continued) Deal Type Descriptor Description # of Deals Total UPB (IN BILLIONS) Total UPB Year K-000 Series for fixed loans with various terms, mostly 10 year terms Floating Rate K-F00 Series for loans with floating rates of various terms Year K-700 Series for fixed loans with 7 year terms Single Sponsor K-ABC Series for Single-Sponsor loans, sometimes single asset Small Balance SB-00 Series for small balance loans, also known as the FRESB series Seniors Housing K-S00 Series for loans backed by multifamily mortgages on senior properties Year K-500 Series for fixed loans with 5 year terms Supplemental K-J00 Series for supplemental loans No-Subordination K-P00 Series for portfolio loans, with no subordinate piece >10 Year K-1500 Series for fixed loans with greater than 10 years Workforce K-W00 Series for workforce housing loans Seasoned K-X00 Series for seasoned loans Large Loan K-L00 Series for large loans Excludes Q-Deals and ML-Deals MULTIFAMILY SECURITIZATION Freddie Mac 35

36 Typical K-Deal Issuance Timeline Internal Pool Preparation (4 weeks) Preliminary Due Diligence (2 weeks) Full Due Diligence (5-6 weeks) Marketing / Placement (1-2 weeks) Closing / Settlement (1-2 weeks) Surveillance (Ongoing) Identify pool collateral Pool preparation including data tapes, asset summary reports and mortgage files Engage rating agencies for preliminary analysis, if applicable Prospective Subordinate bond investors perform preliminary due diligence Subordinate bond investor selected Rating agency performs preliminary analysis completed Select rating agencies, if applicable Perform accounting and legal due diligence Trustee and Master Servicer selected Finalize exceptions to representations and warranties Subordinate bond investor confirms due diligence completed and pool finalized Placement agent announces transaction Respond to investor inquiries Launch and price senior, mezzanine and interest-only classes Finalize offering documents (OCS, IC, OM, PSA, MLPA) Prepare for closing Settlement Mortgage files transferred to Trustee and Master Servicer Guarantor Surveillance team monitoring Review and clear Trustee exception reports Finalize rating agency levels Finalize preliminary offering documents (OCS, IC, OM, PSA, Term Sheet) MULTIFAMILY SECURITIZATION Freddie Mac 36

37 Most Recent 10 Deals Freddie Mac K-Deal Snapshot¹ #of Deals Deal Name Closing Date # of Loans Closing Balance ($ Millions) Guaranteed Balance ($ Millions) Average Cut off Principal Balance ($ Millions) Note Rate (%) Remaining Loan Term (Months) Seasoning (Months) LTV (%) Debt Service Coverage Ratio (x) Loan Balance Top 10 ($ Millions) Acquisition Loans (%) Delinquency (60+ days & REO) Deals , , Deals , , Deals , , Deals ,141 21, , Deals ,391 28, , Deals ,299 21, , Deals ,858 35, , Deals ,643 47, , Deals 9/28/2017 1,736 34, , Q1 3/30/ , , Q2 6/29/ , , Q3 9/28/ , , KSW3 8/18/ , K066 8/22/ , , KBF1 8/30/ KW03 9/19/ KSKY 9/20/ K727 9/25/ , , KJ16 9/26/ KF34 9/27/ , , K067 9/28/ , , KMP1 9/28/ Data as of September 2017 and values in millions MULTIFAMILY SECURITIZATION Freddie Mac 37

38 LTV LTV Credit Metrics K-Deals Our K-Deal program demonstrates consistent credit metrics since the beginning of the program 10-Year K-Deals 80% Cut-off Date LTV Maturity Date LTV Underwritten NCF DSCR (Right Axis, Inverted) 0.00x 70% 60% 50% 0.50x 1.00x 1.50x DSCR 40% K3 K5 K7 K9 K11 K13 K15 K17 K19 K21 K23 K25 K27 K29 K31 K33 K35 K37 K39 K41 K43 K45 K47 K49 K51 K53 K55 K57 K59 K61 K63 K65 K x 80% 70% 7-Year K-Deals 0.00x 0.50x 60% 50% 1.00x 1.50x DSCR 40% K701K702K703K704K705K706K707K708K709K710K711K712K713K714K715K716K717K718K719K720K721K722K723K724K725K726K x MULTIFAMILY SECURITIZATION Freddie Mac 38

39 K-Deal Performance Our K-Deal program continues a strong performance with < 1 bp of losses of total issuance As of September 2017: 99.8% of the K-Deal loans are current by (outstanding principal balance) Three loans are in special servicing (representing <4 bps of outstanding principal) Freddie Mac has not realized any credit losses on our K-Deal guarantees¹ 3.97% of the outstanding loan population (by outstanding principal) is on the servicers watchlist² Floating-Rate Prepayment Information 3 Origination Year Original Balance (Millions) $1, $1, $5, $8, $16, $10, Original WAC 3.37% 2.96% 2.49% 2.30% 2.94% 3.52% Current Balance (Millions) $27.50 $ $1, $4, $13, $10, Current WAC 3.95% 3.94% 3.37% 3.31% 3.71% 3.60% Years Since Securitization K-Deal Vintage Percent Prepaid <1 4.3% 0.0% 0.9% 0.3% 2.1% 0.4% % 34.7% 15.4% 20.1% 12.1% % 37.7% 37.0% 18.4% % 14.1% 1.7% % 5.5% 6 3.8% ¹ There has been $11.94 million in total losses realized by B-Piece investors (representing < 1 bp of total issuance) ² The respective Master Servicers maintain a watchlist for each securitization. Loans are added to and removed from the watchlist in accordance with criteria established by CREFC ³ Information presented in the table is as of January 2017 MULTIFAMILY SECURITIZATION Freddie Mac 39

40 Basic K-Deal Transaction Structure Freddie Mac securitizes loans via the K-Deal program through the following steps: The loans are sold to a third-party depositor who places the loans into a third-party trust Private label securities backed by the loans are issued by the third-party trust Freddie Mac purchases and guarantees certain bonds ( Guaranteed Bonds 1 ) issued by the third-party trust and securitizes these bonds via a Freddie Mac trust. The resulting Freddie Mac guaranteed structured pass-through certificates ( K Certificates ) are publicly offered via placement agents The unguaranteed mezzanine and subordinate bonds are issued by the third-party trust and are privately offered to investors via placement agents Freddie Mac sells loans to a thirdparty depositor Loans deposited into the third-party trust by the depositor Freddie Mac acquires Guaranteed Bonds 1 and deposits them into a Freddie Mac trust Unguaranteed Mezzanine Bonds Freddie Mac sells Guaranteed K Certificates backed by the Guaranteed Bonds Senior Bond Investors Mezzanine Bond Investors Unguaranteed Subordinate Bonds Subordinate Bond Investor RELEVANT PARTIES/ENTITIES Underlying Mortgage Loan Seller Freddie Mac Underlying Originators Freddie Mac Conventional and TAH Seller/Servicers Underlying Master Servicer Selected by Freddie Mac through bidding process Underlying Special Servicer Selected by subordinate bond investor in consultation with Freddie Mac Underlying Trustee/Certificate Administrator Selected by Freddie Mac through bidding process 1 Guaranteed Bonds include senior amortizing bonds as well as interest-only bonds derived from senior and subordinate P&I bonds MULTIFAMILY SECURITIZATION Freddie Mac 40

41 Coupon Sample K-Deal Fixed Rate Coupon and Subordination Primary Master 1 Surveillance 1 Trustee 9 bps 2 bps 2 bps 1 bp Guaranteed Classes Non-Guaranteed Classes CREFC.05 bp 4.54% 4.40% 4.20% 4.10% Primary, Master, Surveillance, Trustee and CREFC Royalty Fees Guarantee Fee 2 X2-A X2-B IO Classes 3.60% 3.50% X1 XAM 2.70% B C X3 A-1 A-2 A-M $102 $103 $103 $98 $84 Class D $ % 14.0% 10.0% 7.5% 0.0% 1 Master Servicer Surveillance and Special Servicer Surveillance fees 2 Guarantee Fee of 20 bps is multiplied by the outstanding principal balance of the A-1, A-2 and A-M certificates MULTIFAMILY SECURITIZATION Freddie Mac 41

42 Sample K-Deal Subordination Sequential Pay MULTIFAMILY SECURITIZATION Freddie Mac 42

43 Sample K-Deal Subordination Pro Rata Pay Pro rata structure is commonly used for floating-rate K-Deals Principal collected is distributed pro rata, unless a Waterfall Trigger Event has occurred and is continuing A Waterfall Trigger Event occurs when (i) the number of nonspecially serviced loans remaining in the pool falls below the designated threshold as defined in the securitization documents or (ii) the total outstanding principal balance of the non-specially serviced loans is less than 15% of the initial total pool balance MULTIFAMILY SECURITIZATION Freddie Mac 43

44 Sample K-Deal Loss Scenarios SCENARIO 1 Example of Loan Loss in Freddie Mac K-Deal Structure This loss example illustrates how the underlying certificates would be affected by loan defaults and the Freddie Mac guarantee assuming that the Servicer is no longer making principal and interest advances with respect to the defaulted loans. This example is hypothetical and for illustrative purposes only. Class balances, loan balances and other mortgage pool characteristics described in this example do not reflect those of any actual underlying certificates or any actual underlying mortgage pools Month 0 Month 15 $15mm pay down to Class A-1 resulting from recovery on the $23mm defaulted loan Month 25 A-1 + A-2 + AM $1.100bn B $50mm C $50mm D $100mm Months 1-14 Regular interest payments of $75mm and amortization payments of $14mm A-1 + A-2 + AM $1.086bn B $50mm C $50mm D $100mm Months Regular interest payments of $46mm which includes interest attributable to the defaulted $23mm loan (paid via Freddie Mac Guarantee) Regular amortization of $12mm which does not include principal attributable to the defaulted $23mm loan A-1 + A-2 + AM $1.059bn B $50mm C $50mm D $92mm $8mm loss on Class D resulting from the loss on the $23mm defaulted loan Assumptions Pool Size: $1.3bn $23mm loan defaults in month 15 (prior to loan maturity) Loan sold for $15mm in month 25, $8mm loss in month 25 MULTIFAMILY SECURITIZATION Freddie Mac 44

45 Sample K-Deal Loss Scenarios (continued) SCENARIO 2 Example of Loan Loss in Freddie Mac K-Deal Structure This loss example illustrates how the underlying certificates would be affected by loan defaults and the Freddie Mac guarantee assuming that the Servicer is no longer making principal and interest advances with respect to the defaulted loans. This example is hypothetical and for illustrative purposes only. Class balances, loan balances and other mortgage pool characteristics described in this example do not reflect those of any actual underlying certificates or any actual underlying mortgage pools Month 0 Month 51 $15mm paydown to Class A-1 resulting from recovery on the $23mm defaulted loan Month 53 A-1 + A-2 + AM $1.100bn B $50mm C $50mm D $100mm Months 1-50 Regular interest payments of $365mm, amortization payments of $125mm and prepayments of $120mm Losses of $100mm extinguishes Class D A-1 + A-2 + AM $855mm B $50mm C $50mm D $0mm Months 52 Regular interest payments of $5mm which includes interest attributable to the defaulted $23mm loan (paid via Freddie Mac Guarantee) Regular amortization of $3mm which does not include principal attributable to the defaulted $23mm loan A-1 + A-2 + AM $837mm B $50mm C $42mm D $0mm With no Class D to absorb losses, Class C is written down by the full amount of the $8mm loss Assumptions Pool Size: $1.3bn Losses occur during the first 50 months resulting in Class D being written down to zero $23mm loan defaults in month 51 (prior to loan maturity) Loan sold for $15mm in month 53, $8mm loss in month 53 MULTIFAMILY SECURITIZATION Freddie Mac 45

46 Sample K-Deal Loss Scenarios (continued) SCENARIO 3 Example of Loan Loss in Freddie Mac K-Deal Structure This loss example illustrates how the underlying certificates would be affected by loan defaults and the Freddie Mac guarantee assuming that the Servicer is no longer making principal and interest advances with respect to the defaulted loans. This example is hypothetical and for illustrative purposes only. Class balances, loan balances and other mortgage pool characteristics described in this example do not reflect those of any actual underlying certificates or any actual underlying mortgage pools Month 0 Month 120 Month 121 Month 125 A-1 + A-2 + AM $1.100bn B $50mm C $50mm D $100mm A-1 Paid Off A-2 $13mm AM $2mm Months A-1 + A-2 + AM Months Paid Off Regular payments of interest and principal Balloon payments in month 120 pay off Class A- 1 and part of Classes A-2 and AM B $50mm C $50mm D $100mm Freddie Guarantee pays $15mm to Classes A-2 and AM in month 120 B $50mm C $50mm D $100mm Freddie Guarantee reimbursement of $15mm reduces $165mm recovery to $150mm Class B is paid off. Class C is paid off. Class D is paid $50mm and is written down by $50mm A-1 + A-2 + AM Paid Off B Paid Off C Paid Off D $0mm Assumptions Pool Size: $1.3bn All loans (with the exception of two) pay off on time in month 120 $115mm and $100mm IO loan maturity defaults in month 120 Loans sold for $165mm in month 125, $50mm loss in month 125 MULTIFAMILY SECURITIZATION Freddie Mac 46

47 K-Deal Placement Agents MULTIFAMILY SECURITIZATION Freddie Mac 47

48 K-Deal 2017 Fourth Quarter Announcement Calendar We provide a calendar of upcoming offerings on freddiemac.com/multifamily OCTOBER M T W TH F A A A NOVEMBER M T W TH F A A DECEMBER M T W TH F A A CALENDAR KEY A OPTIONAL K CERTIFICATES ANNOUNCEMENT WEEK H = U.S. HOLIDAY H A A A H Deal Name Announcement Week Of Freddie Mac Program Collateral Rate Type Collateral Loan Term K-F38 November 6, 2017 Conventional Floating 7-year $1,300 K-69 November 6, 2017 Conventional Fixed 10-year $1,500 K-P04 November 13, 2017 Conventional Floating Various $1,000 K-70 November 27, 2017 Conventional Fixed 10-year $1,300 K-S09 November 27, 2017 Conventional Fixed 10-year $700 K-GS1 December 4, 2017 Conventional Fixed & Floating Various $1,775 K-F39 December 4, 2017 Conventional Floating 7-year $1,400 K-71 December 11, 2017 Conventional Fixed 10-year $1,400 K-729 December 11, 2017 Conventional Fixed 7-year $1,300 K-F40 December 18, 2017 Conventional Floating 10-year $1,100 K-J18 December 18, 2017 Supplemental Fixed Various $225 K-F41 December 18, 2017 Conventional Floating 7-year $600 Projected Issuance Size (Millions) Freddie Mac retains sole discretion over whether or not the K Certificates issuances come to market and the timing thereof, which may be impacted by market conditions. The information contained in the 2017 K Certificates Issuance Calendar does not guarantee the timing of any future Freddie Mac offerings or the amount of such offerings. The Calendar may be amended, superseded or replaced. This Calendar is for informational purposes only and is not an offer to sell any Freddie Mac securities MULTIFAMILY SECURITIZATION Freddie Mac 48

49 Freddie Mac Multifamily Competition 49

50 Competition Fannie Mae Fannie Mae s Delegated Underwriting and Servicing (DUS) program allows pre-approved lenders to underwrite guaranteed loans on behalf of Fannie Mae Each individual loan is generally sold as a one-off DUS MBS Fannie Mae guarantees timely principal and interest on DUS MBS Loss sharing is split between the lender and Fannie Mae (e.g., 1/3 loss to lender, 2/3 to Fannie Mae) DUS MBS Pass-thru cash flows versus structured cash flows on Freddie Mac K-Deals Fixed-rate DUS MBS is typically call protected with yield maintenance instead of defeasance as on Freddie Mac K-Deals Delinquencies are paid off at par by Fannie Mae after a series of missed payments, not worked out in the trust like Freddie Mac K-Deals GEMS Repackaging of DUS MBS by Fannie Mae into a REMIC structure Structures differ from deal to deal and based on the collateral mix compared to relatively static structures for Freddie Mac K-Deals GeMS likely have lower secondary liquidity. Issuance volume in 2016 was $11.6 billion versus $47.3 billion for Freddie Mac K-Deals Individual loans lack geographic diversity and have binary prepayment risk MULTIFAMILY SECURITIZATION Freddie Mac 50

51 Freddie Mac Multifamily Investor Resources 51

52 Investor Overview K-Deal Investors by Type 1 SB-Deal Investors by Type 1 Bank 53% Money Manager 33% Bank 61% Money Manager 21% Hedge Fund 1% Insurance Company/ Pension Plan 13% Insurance Company/ Pension Plan 18% Since the K-Deal program s inception in 2009, the investor base has grown significantly: 495 investors historically, with 234 participating in 2017 through Q3 Average of 30 different accounts per transaction historically, 30 per transaction in 2017 through Q3 41 subordinate investors historically, with 14 participating in 2017 through Q3 1 Data reflects senior bond allocations YTD for deals closed through September 30, 2017 Since the SB-Deal program s inception in 2015, the investor base has grown significantly: 204 investors historically, with 144 participating in 2017 through Q3 Average of 22 different accounts per transaction historically, 30 per transaction in 2017 through Q3 8 subordinate investors historically, with 7 participating in 2017 through Q3 Average of 6 new investors per transaction in 2017 through Q3, 74 new investors in 2017 through Q3 MULTIFAMILY SECURITIZATION Freddie Mac 52

53 Resources - Multifamily Loans Performance Database 1 Multifamily Loan Performance Database (MLPD) is available on FreddieMac.com. It provides quarterly performance information on Freddie Mac's loans which includes more than 25,586 loans with a total origination UPB of over $323 billion that were purchased by Freddie Mac from 1994 through the end of 2017 Q2 Of this reported population, approximately 0.23% has defaulted by UPB through the end of 2017 Q2 1.8% 1.6% 1.4% Percent Defaulted by Funding Year 1.6% 1.5% 1.4% 1.2% 1.0% 0.8% 0.6% 0.6% 0.5% 0.7% 0.7% 0.5% 0.4% 0.2% 0.0% 0.2% 0.0% 0.3% 0.2% 0.2% 0.1% 0.1% 0.0% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% The Multifamily Loan Performance Database (MLPD) provides historical information on a subset of the Freddie Mac multifamily loan portfolio. The MLPD comprises information regarding certain multifamily whole loan, K-Deal and SBL-Deal loans. It excludes loans that are credit revolvers, sold book (pre-1994) loans, and negotiated transactions/structured deals and K001 and K002. MULTIFAMILY SECURITIZATION Freddie Mac 53

54 K-Deal Investor Participation We continue to build on our K-Deal brand growing our securitization volumes and investor base 300 Investor Participation Investor Accounts Linear (Investor Accounts) A total of 258 accounts purchased K-Deal bonds in 2016, with an average of 26 different investors on each deal MULTIFAMILY SECURITIZATION Freddie Mac 54

55 Resources - Multifamily Securities Information on FreddieMac.com On our website, you will find useful information on products offered by Freddie Mac Multifamily and more ISSUANCE CALENDARS K-Deals, ML-Deals and SB- Deals. For other types of deals, please contact us PRESENTATIONS AND DATA Provide important current and historical information about securities and other offerings LOOKUP TOOLS Multifamily Securities Investor Access (MSIA) online tool that provides investors and analysts with information related to Freddie Mac Multifamily K-Deal, Q-Deal and SB-Deal securities and their underlying collateral DETAILED INFORMATION Securities offered by Freddie Mac Multifamily, including K and KT Certificates, SB Certificates, Q Certificates, M Certificates and ML Certificates LINKS TO OUR RECENT HEADLINES This section offers our latest news releases Investor Inquiries MULTIFAMILY SECURITIZATION Freddie Mac 55

56 Resources - Multifamily Securities Information on FreddieMac.com (continued) Multifamily Securities Investor Access (MSIA) is an online tool that provides investors and analysts with information related to Freddie Mac s K-Deals, ML-Deals, Q-Deals SB-Deals and PCs securities and their underlying collateral. It also provides information about SCR Notes The available data includes Standard Investor Reporting Package provided on a monthly basis by the Master Servicer and trustee for a given security issuance K-Deal Supplemental Mortgage Report For a single deal or a portfolio, this tool provides a combination of standard and custom reporting capabilities:» Bond Level Data» Collateral Summary» Delinquent Loan Status Report» Distribution Date Statement (PDF)» Distribution Date Statement (XLS)» Financial File» Loan Periodic Data» Operating Statement Analysis Report (PDF)» Operating Statement Analysis Report (XLS)» Property Summary» Restricted Servicer Reports MULTIFAMILY SECURITIZATION Freddie Mac 56

57 Resources - Multifamily Research Our in-house research team led by Steven Guggenmos provides research publications about the multifamily market Rental Affordability is Worsening Steve and Aaron Explore Rental Housing Affordability 2017 Multifamily Mid-year Outlook The Freddie Mac Multifamily Apartment Investment Market Index SM (AIMI SM ) can help you determine how the relative value of investing in multifamily properties in select major metros, and nationally, has changed over time Multifamily news sign-up MULTIFAMILY SECURITIZATION Freddie Mac 57

58 APPENDIX I Recent Transaction Highlights 58

59 K-67 Transaction Highlights Overview of Deal Structure (Pricing Date: September 22, 2017) Structural Diagram Class Offered K-067 Certificates: Initial Principal or Notional Amount Pricing Spread Assumed Weighted Average Life A-1 $113,345,000 S A-2 $1,073,242,000 S A-M $48,468,000 S X1 $1,186,587,000 T XAM $48,468,000 T X3 $201,056,554 T Total Guaranteed $1,235,055,000 Freddie Mac (Mortgage Loan Seller) FREMF K-67 Mortgage Trust Classes A-1, A-2, A-M, X1, XAM & X3 Classes B and C Freddie Mac SPC Trust, Series K-067 Classes A-1, A-2, A-M, X1, XAM & X3 Investors (including Freddie Mac) Investors Deal Characteristics 1 Collateral Type Multifamily Fixed-Rate Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 67 Initial Underlying Pool Balance $1,471,501,036 Rating Agencies Moody s/kbra Waterfall Structure Sequential Top 5 State Concentrations CA (22.0%), VA (10.8%), TX (10.5%), CO (7.7%), GA (7.5%) WA Mortgage Interest Rate 4.181% WA Original Maturity 120 months WA DSCR 1.53x WA LTV 67.8% Classes D, X2-A and X2-B Investors Breakdown of Investors (Classes A-1, A-2, A-M, B and C) 2 Other 2% Banks 19% Hedge Fund Insurance 1% Company/ Pension Plan 23% Money Manager 61% 1 As of the Cut-off Date 2 As of the Closing Date MULTIFAMILY SECURITIZATION Freddie Mac 59

60 K-727 Transaction Highlights Overview of Deal Structure (Pricing Date: September 15, 2017) Structural Diagram Initial Principal or Class Notional Amount Offered K-727 Certificates: Pricing Spread Assumed Weighted Average Life A-1 $72,500,000 S A-2 $1,089,310,000 S A-M $62,271,000 S X1 $1,161,810,000 T XAM $62,271,000 T X3 $199,270,141 T Total Guaranteed $1,224,081,000 Freddie Mac (Mortgage Loan Seller) FREMF K727 Mortgag e Trust Classes A-1, A-2, AM, X1, X3 & XAM Classes B and C Freddie Mac SPC Trust, Series K-727 Classes A-1, A-2, AM, X1, X3 & XAM Investors (including Freddie Mac) Investors Deal Characteristics 1 Collateral Type Multifamily Fixed-Rate Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 51 Initial Underlying Pool Balance $1,423,351,142 Rating Agencies S&P/KBRA Waterfall Structure Sequential Top 5 State Concentrations TX (15.3%), FL (13.3%), NY (12.5%), CO (8.9%), MD (6.4%) WA Mortgage Interest Rate 3.973% WA Original Maturity 85 months WA DSCR 1.54x WA LTV 69.7% Money Manager 26% Other 16% Class D Bank 38% Investors Breakdown of Investors (Classes A-1, A-2,A-M, B and C) 2 1 As of the Cut-off Date Hedge Insurance 2 As of the Closing Date Fund Company/P 1% MULTIFAMILY SECURITIZATION Freddie Mac ension Plan 60 19%

61 K-F28 Transaction Highlights Overview of Deal Structure (Pricing Date: March 2, 2017) Structural Diagram Class Offered K-F28 Certificates: Initial Principal or Notional Amount Pricing Spread Assumed Weighted Average Life A $1,180,353,000 L XI $1,311,503,672 N/A 6.51 XP $1,311,503,672 N/A N/A Total Guaranteed $1,180,353,000 Freddie Mac (Mortgage Loan Seller) FREMF KF28 Mortgage Trust Classes A, XI & XP Class B Freddie Mac SPC Trust, Series K-F28 Classes A, XI & XP Investors (including Freddie Mac) Investors Deal Characteristics 1 Collateral Type Multifamily Floating-Rate Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 61 Initial Underlying Pool Balance $1,311,503,672 Rating Agencies Not Rated Waterfall Structure Pro Rata Top 5 State Concentrations TX (13.5%), OR (11.0%), MD (10.0%), CA (9.1%), AZ (9.0%) WA Original Maturity 80 months WA DSCR 1.39x WA LTV 71.8% Class C Breakdown of Investors (Classes A and B) 2 Banks 68% Money Manager 23% Investors Insurance Company/ Pansion Plan 3% Other 6% 1 As of the Cut-off Date 2 As of the Closing Date MULTIFAMILY SECURITIZATION Freddie Mac 61

62 K-J16 Transaction Highlights Overview of Deal Structure (Pricing Date: September 13, 2017) Assumed Class Initial Principal or Notional Amount Pricing Spread Weighted Average Life Offered K-J16 Certificates: A-1 $15,790,000 S A-2 $95,193,000 S X $138,729,326 N/A 4.39 Total Guaranteed $110,983,000 Structural Diagram Freddie Mac (Mortgage Loan Seller) FREMF KJ16 Mortgage Trust Classes A-1, A-2 & X Freddie Mac SPC Trust, Series K-J16 Classes A-1, A-2 & X Investors (including Freddie Mac) Deal Characteristics 1 Collateral Type Multifamily Supplemental Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 28 Initial Underlying Pool Balance $138,729,327 Rating Agencies Not Rated Waterfall Structure Pro Rata State Concentration CA (24.6%), NC (14.3%), VA (12.5%), MI (8.6%), GA (8.3%) WA Mortgage Interest Rate 5.200% WA Original Maturity 68 months WA DSCR 1.38x WA LTV 66.4% Breakdown of Investors (Classes A-1 and A-2) 2 Bank 68% Class B Money Manager 18% Investors Insurance Company/ Pension Plan 14% 1 As of the Cut-off Date 2 As of the Closing Date MULTIFAMILY SECURITIZATION Freddie Mac 62

63 K-S08 Transaction Highlights Overview of Deal Structure (Pricing Date: May 16, 2016) Structural Diagram Initial Principal or Class Notional Amount Offered K-S08 Certificates: Pricing Spread Assumed Weighted Average Life A-1 $11,911,000 L A-2 $167,651,000 L X1 $179,562,000 T A-FL $481,928,000 L XI $535,476,000 T XP $535,476,000 T+1018 N/A Total Guaranteed $661,490,000 Freddie Mac (Mortgage Loan Seller) FREMF K-S08 Mortgage Trust Classes A-1, A-2, X1, A-FL, XI, and XP Class B Freddie Mac SPC Trust, Series K-S08 A-1, A-2, X1, A-FL, XI, and XP Investors (including Freddie Mac) Investors DealCharacteristics 1 Collateral Type Multifamily Seniors Housing Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 36 Initial Underlying Pool Balance $734,990,000 Rating Agencies Not Rated Waterfall Structure Sequential Top 5 State Concentrations FL (29.2%), IL (18.0%), PA (11.7%), NY (10.4%), GA (9.8%) WA Mortgage Interest Rate 3.026% WA Original Maturity 120 months WADSCR 1.48x WALTV 71.0% Breakdown of Investors(ClassesA-1,A-2) 2 Other 12% Banks 28% Money Manager 50% Hedge Fund Insurance 1 AsoftheCut-offDate 2 1% Company/ AsoftheClosingDate Pension MULTIFAMILY SECURITIZATION Freddie Mac Plan 63 9%

64 K-W03 Transaction Highlights Overview of Deal Structure (Pricing Date: September 6, 2017) Structural Diagram Initial Principal or Class Notional Amount Offered K-W03 Certificates: Pricing Spread Assumed Weighted Average Life A-1 $129,151,000 S A-2 $358,670,000 S X1 $487,821,000 T X3 $487,821,000 T Total Guaranteed $487,821,000 Freddie Mac (Mortgage Loan Seller) FREMF KW03 Mortgage Trust Classes A-1, A-2, X1 & X3 Class B Freddie Mac SPC Trust, Series K-W03 A-1,A-2, X1 & X3 Investors (including Freddie Mac) Deal Characteristics 1 Collateral Type Multifamily Workforce Housing Mortgage Loans Collateral Structure Type Balloon Mortgaged Loans 75 Initial Underlying Pool Balance $542,024,192 Rating Agencies Not Rated Waterfall Structure Sequential Top 5 State Concentrations TX (13.1%), AZ (10.4%), MI (9.5%), FL (7.3%), NC (5.6%) WA Mortgage Interest Rate 4.350% WA Original Maturity 115 months WA DSCR 1.49x WA LTV 69.8% Class C, X2-A and X2-B Money Manager 68% Investors Breakdown of Investors (Classes A-1, A-2 and B) 2 Insurance Company/ Hedge Pension Fund Plan Banks 1% 10% 21% 1 As of the Cut-off Date 2 As of the Closing Date MULTIFAMILY SECURITIZATION Freddie Mac 64

65 SB38 Transaction Highlights Overview of Deal Structure (Pricing Date: September 19, 2017) Initial Principal or Class Notional Amount Offered FRESB 2017-SB38 Certificates: Deal Characteristics Collateral Type Multifamily Small Balance Loans Initial Underlying Pool Balance $259,012,247 Mortgage Loans 105 Rating Agencies Not Rated WA Initial Fixed Mortgage Interest Rate 4.313% Pricing Spreads Assumed Weighted Average Life 1 A-5F $9,208,000 S A-5H $65,023,000 S A-7F $16,700,000 S A-7H $13,655,000 S A-10F $72,563,000 S A-10H $55,962,000 S X1 $259,012,247 N/A 5.02 Total Guaranteed $233,111,000 Structural Diagram Freddie Mac (Mortgage Loan Seller) FRESB 2017-SB38 Mortgage Trust Classes A-5F, A-5H, A-7F, A-7H, A-10F, A- 10H & X1 Class B Investors (including Freddie Mac) Investors Breakdown of Investors (Classes A-5F, A-5H, A-7F, A- 7H, A-10F, and A-10H) Banks 77% WA DSCR 1.38x WA LTV 69.9% WA Original Maturity 184 Months Waterfall Structure Pro Rata 2 Top 5 State Concentrations FL (12.8%), IL (12.4%), TX (10.5%), CA (10.3%), OH (8.4%) Money Manager 11% Insurance Company/ Pension Fund 12% 1 Assumes a 5% CPR prepayment speed until the earlier of each underlying loan s maturity date or first interest reset date, at which time the loan is assumed to pay in full 2 Waterfall structure will change from pro rata to sequential upon the earlier of (i) the aggregate Stated Principal Balance of the underlying loans as of the related determination date is less than or equal to 15% of the initial Principal Balance of the pool (ii) aggregate loans that are at least 60 days delinquent is greater than 4% of pool balance UPB or (iii) the Class B percentage is less than 7.5% as of the related distribution date MULTIFAMILY SECURITIZATION Freddie Mac 65

66 APPENDIX II Multifamily Team 66

67 Multifamily Line of Business Freddie Mac Multifamily operates as a fully integrated line of business and has a largely independent operating infrastructure David Brickman Executive Vice President and Head of the Multifamily Line of Business John Cannon Sr. Vice President Production & Sales David Leopold Vice President Affordable Sales & Investments Debby Jenkins Sr. Vice President Underwriting & Credit Michael Lipson Sr. Vice Pres. Asset Mgmt. & Operations Advisor Leanne Spies Sr. Vice President MF Asset Mgmt. & Operations Robert Koontz Vice President MF Capital Markets Victor Pa Vice President MF Investments & Advisory Susan Mudry Vice President Business Management Market, originate and structure loan products; ensure volume, profitability and affordable housing targets are met; manage relationships with Sellers and Borrowers Deliver consistent and high quality transactions to the firm by analyzing transaction strengths and weaknesses and approving the creditworthiness of each loan transaction. Responsible for loan level due diligence, credit functions within securitization and risk transfer processes and credit policies Manage Servicer relationship and Seller/Servicer performance reviews. Manage ongoing risk and loss mitigation efforts for the Multifamily portfolio through a risk-based approach. Manage and implement business transformation including strategic planning, systems and processes. Manage loan funding and document custody, loan servicing, Seller/Servicer counterparty risk, data management, governance and operational risk Perform pricing and securitization functions related to Multifamily mortgage purchases intended for securitization and new issue securities. Manage investor relations, securities marketing and relationships with bankers Perform all portfolio management, valuation and costing of Multifamily assets. Establish and execute investments, funding and hedging policies and transactions. Develop and manage Multifamily models and analytical capabilities Establish, manage and implement divisional strategy and administration activities. Manage new business initiatives process, customer communications, marketing, training and events Multifamily Line of Business Partners Bill Buskirk Vice President Multifamily CFO Robert Gundry Vice President Enterprise Commercial RE Credit Risk Jeff Markowitz Senior Vice President Corporate Communication Tim O Neill Vice President Legal Melissa Chiari Vice President Information Technology Lisa Stone Vice President Human Resources MULTIFAMILY SECURITIZATION Freddie Mac 67

68 Multifamily Team David M. Brickman Executive Vice President Multifamily David Brickman is executive vice president and leads all aspects of Freddie Mac s Multifamily business one of the largest capital providers to the U.S. multifamily rental housing market. He is a member of the company s senior operating committee and reports directly to CEO Don Layton. David presided over significant growth in the Multifamily business raising annual production from $16 billion in 2010 to $56.8 billion in 2016 and increasing the organization s staff members from approximately 300 people in four offices to more than 800 in a dozen locations across the country. He firmly established Freddie Mac Multifamily' s flagship K-Deal securitization program as one of the leading securitized products in the structured finance markets. Before becoming the head of Multifamily, David served as senior vice president and, prior to that, vice president in charge of our Multifamily Capital Markets business area. In this position, David oversaw all functions related to Freddie Mac s multifamily and CMBS investment and capital markets activities. He is also the key architect behind several of Freddie Mac s innovative multifamily financing products, including the Capital Markets Execution and K-Deal securitization program, Reference Bill ARM, fixed-to-float suite of products, and Performance-Based PC, for which he holds a U.S. patent. Prior to joining Freddie Mac in 1999, David co-led the Mortgage Finance and Credit Analysis consulting group at PricewaterhouseCoopers. David has completed all doctoral coursework for his Ph.D. in economics and real estate at the Massachusetts Institute of Technology. He holds a master s degree in public policy from Harvard University and a bachelor s degree from the University of Pennsylvania. He has held appointments as a professorial lecturer in finance at The George Washington University and as an adjunct professor of finance at Johns Hopkins University. MULTIFAMILY SECURITIZATION Freddie Mac 68

69 Multifamily Team (cont d) John Cannon, Senior Vice President Production & Sales John Cannon is our main voice in the origination market and defines our Multifamily customer service culture. He leads the production and sales team that purchases conventional multifamily mortgages, manages our network of approved conventional lenders, shapes our competitive position in the marketplace, and works directly with lenders and Borrowers on deals. He holds a B.A. in international studies from Lafayette College and an M.S. in finance from Drexel University s LeBow College of Business. Mike Lipson, Senior Vice President Multifamily Asset Management & Operations Advisor Mike advises Freddie Mac s servicing portfolio, as well as the technology initiatives for the division. Prior to joining Freddie Mac in 2011, he was president and CEO of Berkadia Commercial Mortgage LLC, and executive vice president of Capmark Finance where he managed oversight of the origination, underwriting and closing of loans. He holds a B.A. in political science and an M.S. in real estate & urban development planning from American University. He is also a Certified Mortgage Banker (CMB). Debby Jenkins, Senior Vice President and National Head of Multifamily Underwriting & Credit Debby Jenkins manages the underwriting and credit (UW&C) approvals for all Multifamily debt investments, and the UW&C staff at our offices across the country. She also managed and developed the underwriting process for multifamily loans eligible for securitization. Before joining Freddie Mac in 2008, Debby worked at Wells Fargo and Bloomfield Acceptance Company. She holds a B.S. in corporate finance from Wayne State University and an M.S. in corporate finance from Walsh College. Leanne Spies, Senior Vice President Multifamily Asset Management & Operations Leanne Spies leads the team responsible for asset management and the operations of our servicing portfolio, ensuring sound business management and a responsive experience for customers. Her team manages our loan purchases and funding, investor reporting and remitting, the cash desk, records and data management, and operational close. She also manages Seller/Servicer eligibility, performance and audit reviews, and the Multifamily Seller/Servicer Guide. Leanne holds a bachelor s degree from Virginia Tech s Pamplin College of Business. MULTIFAMILY SECURITIZATION Freddie Mac 69

70 Multifamily Team (cont d) Kelli Carhart, Vice President Production & Sales Kelli Carhart is responsible for overseeing originations in the Central Region, and manages a production team in Chicago and in the Texas offices of Austin, Houston and Dallas. Kelli is also actively involved in Freddie Mac s student housing platform, serving as Freddie Mac s student housing representative for the Central and Western Regions. She holds a Bachelor of Business Administration in finance, real estate and urban land economics from the University of Wisconsin-Madison. Lauren Garren, Vice President Multifamily Production & Sales Lauren Garren leads the Structured Transaction group working with Seller/Servicers and their Borrowers to develop creative and unique structures that meet Borrowers evolving needs; and Production Operations managing the Select Sponsor program, divisionwide process improvements, and internal and external performance goals. Lauren has been at Freddie Mac for over 12 years. She holds a B.S. in accounting from Virginia Tech s Pamplin College of Business and an M.S. in finance from American University. Alex Chang, Vice President Multifamily Underwriting & Credit Alex Chang oversees the Risk Distribution and Credit Team (formerly Capital Markets Execution (CME) Underwriting) and the Multifamily Credit Policy Team. In early 2009, he joined the CME underwriting team, which he was instrumental in building, and helped develop the processes and infrastructure for our K-Deal program s asset-level due diligence. He holds a B.A. in finance and East Asian studies from the University of Virginia and an M.S. in finance from American University. Peter Giles, Vice President Production & Sales Peter Giles leads our teams in the Central and Western Regions that work with approved Seller/Servicers for conventional and senior housing loans and their Borrowers to source loans to Freddie Mac Multifamily. He also leads a team supporting manufactured housing communities. Peter joined Freddie Mac Multifamily in 1998, with prior experience in the commercial mortgage banking industry working for Metmor Financial Inc., Mellon Mortgage Company and Great Lakes Financial Group LLC. He attended the University of Oklahoma. MULTIFAMILY SECURITIZATION Freddie Mac 70

71 Multifamily Team (cont d) Steve Guggenmos, Vice President Research & Modeling Steve Guggenmos leads multifamily research at Freddie Mac, performing research related to national and market-specific multifamily conditions. His team develops models that determine risk-based capital allocations and the benefits of diversification and structural credit support for multifamily mortgages. Steve holds a B.A. in economics from the University of Nebraska-Lincoln, an M.A. in economics from American University and an M.S. in finance from The George Washington University. Stephen Johnson, Vice President Small Balance Loan Business Stephen Johnson leads the Small Balance Loan (SBL) business line by overseeing the development and implementation of innovations to improve the speed and flow of capital nationwide, and addressing the rapidly evolving needs of Multifamily customers in this space. Stephen also oversees lender relationship management, performance management, and overall line-of-business economics. He earned a B.A. in government from the University of Virginia. Christine Halberstadt, Vice President Multifamily Asset Management Christine Halberstadt leads the Servicer & Client Management team that handles customer relationships, Seller/Servicer Performance Reviews, insurance, loan boarding and monitoring activities. She directs strategic planning and initiative delivery for Multifamily. Before Freddie Mac, Christine was with National City s Capital Markets and Accenture. She has an MBA and B.S. degree in business administration and economics from Carnegie Mellon University and a master s in real estate from Georgetown University. Robert Koontz, Vice President Multifamily Capital Markets Robert Koontz leads the Multifamily Capital Markets team. He manages relationships with securities investors, credit rating agencies and the broker/dealer community. Robert helped develop new securities structures and capital-market innovations. Before Freddie Mac, he was a vice president at Wachovia Securities and Banc of America Securities. Robert holds a master's degree in real estate from Georgetown University and a B.S. in business administration finance from the University of South Carolina-Columbia. MULTIFAMILY SECURITIZATION Freddie Mac 71

72 Multifamily Team (cont d) Stephen Lansbury, Vice President Underwriting Steve Lansbury directs our conventional loan underwriting process, working with approved Seller/Servicers, their Borrowers, and our production and sales staff to source loans to Freddie Mac Multifamily. He played an integral role in creating process efficiencies, providing new offerings for our customers, and re-orienting the underwriting model to produce loans for securitization, chiefly through our K-Deal program. Lansbury earned a B.A. from the University of Virginia. Richard Martinez, Vice President Production & Sales Richard Martinez leads our teams in the Northeast and Southeast Regions that work with approved Seller/Servicers for conventional loans and their Borrowers to source a steady flow of high-quality loans to Freddie Mac Multifamily. His team also manages our nationwide program for student housing. Richard earned a Bachelor of Arts in history from Saint Louis University and a Master of city and regional planning from Harvard s Kennedy School of Government. David Leopold, Vice President Affordable Housing Production David Leopold manages all relationships, transactions and deal negotiations for the affordable housing business involving targeted affordable lenders, affordable borrowers and LIHTC syndicators. He is the lead contact with housing finance agencies, municipalities and community-based organizations in community development products, programs and services. David is a licensed financial advisor and has undergraduate and graduate degrees from Fordham University and the University of Colorado, respectively. Carl McLaughlin, Vice President Loan Servicing Carl McLaughlin is responsible for all loan servicing operations and loan administration. He joined Freddie Mac s Single Family division 17 years ago as a Mortgage Purchase Analyst. He later became an Operational Risk Manager, where he helped manage, and eventually directed, operational risk across various Single Family and Multifamily operational risk types and internal organizations. Carl earned his B.S. in business management from North Carolina Agricultural and Technical State University. MULTIFAMILY SECURITIZATION Freddie Mac 72

73 Multifamily Team (cont d) Susan Mudry, CFA, Vice President Business Management Susan Mudry leads the teams in charge of offerings management, regulatory relations, business communications and customer marketing. Susan and her teams facilitate the development of business strategy, work with our regulator, coordinate how we bring new initiatives to market, and manage our brand, websites, events and training. She has been with Freddie Mac for over 20 years. Susan earned a B.A. in economics from Dartmouth College and holds a Chartered Financial Analyst designation. Michael Patterson, Vice President Multifamily Underwriting Michael Patterson is a 20 plus-year veteran of Freddie Mac with achievements across capital markets and sourcing. As the head of specialty products underwriting, he works to strengthen relationships with lenders and Borrowers by offering innovative credit solutions. Michael has guided the underwriting growth for our more specialized businesses, including Targeted Affordable Housing, Seniors Housing and Structured Transactions. He holds a B.A. in international affairs from The George Washington University. Victor Pa, CFA, Vice President Multifamily Investments & Advisory Victor Pa manages Freddie Mac s more than $150 billion Multifamily and CMBS portfolio and the securitization and securities trading functions for multifamily mortgages and securities. He brings 20 years of experience and has a strong background in portfolio management, structuring of mortgage cash flows, analysis of credit and market risks, and structured pricing. Victor holds an MBA in finance and a B.S. in engineering, both from Virginia Tech, and the Chartered Financial Analyst designation. Aaron Dunn, Director Multifamily Capital Markets Aaron Dunn manages fixed-income and real estate investors who participate in our securitization program. In addition to K Certificates, he leads the creation of mortgage-backed securities supporting student housing, independent and assisted living facilities, small balance apartments, MHCs and workforce housing. Before Freddie Mac, Aaron was managing director of Commercial Capital Markets for Redwood Trust. He holds a B.A. in economics from the University of Chicago and an MBA from Northwestern University. MULTIFAMILY SECURITIZATION Freddie Mac 73

74 Multifamily Line of Business Partners Bill Buskirk, Vice President Multifamily Segment CFO Bill Buskirk is responsible for the accounting, financial and management reporting function of Freddie Mac s Multifamily line of business that supports the acquisition, refinance, rehabilitation, and construction of apartment communities. Bill has been with Freddie Mac for 15 years serving in various roles within the Finance group. He holds a B.S. from the University of Delaware, is a certified public accountant and holds the chartered financial analyst designation. Robert Gundry, Vice President Enterprise Commercial Real Estate Risk Officer Bob Gundry is responsible for risk management oversight and effective challenge to the company's Multifamily Division covering risk policy, portfolio risk, large transaction approvals, portfolio analytics and credit risk transfer reporting/analytics. Bob brings to Freddie Mac 35 years of commercial real estate experience in portfolio lending and capital market executions. He graduated from the University of Southern California with a B.S. in Finance and Quantitative Methods. Tim O Neill, Vice President Deputy General Counsel Tim O Neill is a vice president and deputy general counsel in the Legal Department of Freddie Mac where he is responsible for managing a team of 27 attorneys, together with managers, paralegals and analysts who support the purchase, sale and servicing of Multifamily loans. Tim has been at Freddie Mac for 25 years. He has a law degree from Temple University and completed his undergraduate work at Haverford College. Melissa Chiari, Vice President Business Technology Officer & Service Delivery Officer App Management & Testing Melissa Chiara is responsible for partnering with Freddie Mac s Multifamily division to develop and execute its long-term road map and technology strategy. In this role, she oversees application development, implementation and maintenance services, and ensures continued progress in developing a higher-performing solution delivery organization with a primary focus on enabling business results. With more than 20 years of IT experience, Melissa has worked at Freddie Mac for over 10 years. Melissa earned a B.A. from Virginia Tech. Jeffrey Markowitz, Senior Vice President External Relations & Corporate Communications In his role as SVP, Jeffrey Markowitz oversees Congressional, State and Industry Relations, which includes the company s work with trade groups representing homebuilders, realtors, lenders, and housing advocates. He also oversees Public Relations and Social Media, Marketing, Internal Communications, Market Research and the company s web presence. He began his work at Freddie Mac in the Legal Division, where he worked on fair lending, affordable housing, and a variety of other legislative and regulatory issues. Jeffrey is a graduate of the Yale Law School and holds a degree in Business Administration from Georgetown University. MULTIFAMILY SECURITIZATION Freddie Mac 74

75 This product overview is not an offer to sell or a solicitation of an offer to buy any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac s Annual Report on Form 10-K and certain other reports filed with the Securities and Exchange Commission. This document contains information related to, or referenced in the offering documentation for, certain Freddie Mac mortgage securities. This information is provided for your general information only, is current only as of its date and does not constitute an offer to sell or a solicitation of an offer to buy securities. The information does not constitute a sufficient basis for making a decision with respect to the purchase and sale of any security and is directed only at, and is intended for distribution to and use by, qualified persons or entities in jurisdictions where such distribution and use is permitted and would not be contrary to law or regulation. All information regarding or relating to Freddie Mac securities is qualified in its entirety by the relevant offering circular and any related supplements. You should review the relevant offering circular and any related supplements before making a decision with respect to the purchase or sale of any security. In addition, before purchasing any security, please consult your legal and financial advisors for information about and analysis of the security, its risks and its suitability as an investment in your particular circumstances. The examples set forth above are for illustrative purposes only. Opinions contained in this document are those of Freddie Mac currently and are subject to change without notice. Please visit for more information. MULTIFAMILY SECURITIZATION Freddie Mac 75

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