What is a Guaranteed Mortgage Certificate (GMC)?
A Guaranteed Mortgage Certificate (GMC) is bond that is backed by a mortgage. Since 1975 GMCs have been issued by the Federal Home Loan Mortgage Corporation (Freddie Mac) – a public government sponsored enterprise, headquartered in Virginia.
GMCs represent interest in conventional whole loans and participations that Freddie Mac previously purchased.
They represent undivided interest in a pool residential mortgages. They have a guaranteed average life, and interest and principal are paid on a semiannual basis.
If the mortgages that back Guaranteed Mortgage Certificates prepay at a faster rate than the guaranteed minimum rate, then the investor receives complete payment of the principal.
“First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.”