Freddie Mac Tax Exempt Bond Securitization (TEBS) for Large-Scale Investors

Freddie Mac Bond Securitization Allows Financial Institutions and Seller-Servicers to Diversify Portfolios, Reduce Risk, Increase Profitability, and Sell Bonds for Cash

If you represent a financial institution or investor with $100 million or more in multifamily affordable housing bonds, Freddie Mac's Tax-Exempt Bond Securitization (TEBS) program allows for the transfer of these unrated bonds to Freddie Mac in exchange for Freddie Mac Rated M-class Certificates. Specifically, the unrated bonds will be exchanged for Freddie Mac senior Class-A M Certificates, which are are usually sold to investors, and Subordinate Class-B M Certificates, which are usually kept by the Sponsor. This exchange allows investors and institutions to reduce their risk profile, improve their bond yields, better manage their balance sheets, and cash out their bonds by selling them to other investors. 

To learn more, check out Freddie Mac’s official Tax Exempt Bond Securitization (TEBS) Product Sheet or keep reading below for an in-depth explanation of the Freddie Tax Exempt Bond Securitization (TEBS) program.

Sample Freddie Mac Terms For Tax Exempt Bond Securitization (TEBS)

Amount:  Typically $100 million or greater 

Product Description: 

With TEBS, investors transfer privately placed tax-exempt bonds to Freddie Mac in exchange for:

  • Freddie Mac Senior Class-A M Certificates (typically sold to investors)

  • Subordinate Class-B M Certificates (typically retained by the Sponsor)

Class-A M Certificates are "fully guaranteed tax-exempt or taxable securities supported by pools of unenhanced tax-exempt multifamily housing revenue bonds or related taxable bonds or loans".

Maximum LTV/Minimum DSCR:  95%/1.05x (per each asset, with Freddie Mac underwriting) 

Variable-Rate Certificates:  For variable-rate Class-A M Certificates, Freddie Mac may provide a liquidity facility, which guarantees the purchase price of the certificates if they are sold to an outside investor 


  • Helps Sponsors manage their balance sheets by reducing the concentration of multifamily assets

  • Reduced risks for sponsors, as they're replacing higher-risk multifamily bonds with risk-capped Class-B M Certificates (if they decide to retain them)

  • Class-B M Certificates may also provide increased profitability

  • Class-A M Certificates can be sold for cash, making monetization faster and easier for Sponsors


  • Upfront fees, including underwriting fees, legal fees, execution fees, tax opinion fees, modeling fees, rating agency fees, and liquidity facility fees (when applicable), typically totaling 0.5% of transaction amount

  • Ongoing fees, including Freddie Mac guarantee fees, servicing fees, and re-marketing agent fees/liquidity facility fees (if Class-A M Certificates are variable-rate)

  • Each property requires significant documentation, including:

    • Appraisals or Market Studies

    • Current rent rolls

    • Current and historical financial statements

    • Sponsor organizational documents

    • Ground lease information (if applicable)

    • HAP contracts and amendments (if applicable)

    • LURA or Regulatory Agreements

    • Evidence of tax credits awarded or tax credit application

    • As-built surveys

    • Title policies

    • Bond amortization schedules

    • Insurance reviews

    • Seismic reports (if applicable)

    • Terms of subordinate debt (if applicable)