Which mortgage-backed security is not backed by the full faith and credit of the US government?

• A. Freddie Mac Participation Certificates
• B. Ginnie Mae certificates
• C. Fannie Mae securities
• D. U.S. Treasury securities

Answer: (A)

Backing of mortgage-backed securities by the government varies between explicit guarantees and issuer support. U.S. Treasury securities are explicitly backed by the full faith and credit of the U.S. government, and Ginnie Mae certificates carry an explicit government guarantee. Freddie Mac, as a government‑sponsored enterprise, issues securities that are not backed by the government’s full faith and credit; they are supported by Freddie Mac’s own credit and the mortgage pools it guarantees. Therefore, Freddie Mac Participation Certificates do not carry the government’s full faith and credit guarantee. (Note: Fannie Mae is in the same general category as Freddie Mac, but the example given focuses on Freddie Mac.)