The Gold PC Exodus: Investors Face 2026 Deadline to Modernize

MCLEAN, Va. – December 18, 2025 – Freddie Mac has officially set the endgame for a pivotal chapter in the evolution of the U.S. mortgage market. The government-sponsored enterprise (GSE) announced today that its long-standing exchange offer for older Gold Participation Certificates (PCs) and Giant PCs will permanently close on December 18, 2026. The announcement serves as a final, one-year notice for investors to convert these legacy assets into modern, more liquid Uniform Mortgage-Backed Securities (UMBS).

The exchange program, first launched on May 7, 2019, has been a cornerstone of the industry-wide Single Security Initiative. It provided a crucial bridge for market participants to transition from Freddie Mac’s proprietary securities to a standardized instrument fungible with those of its counterpart, Fannie Mae. With the deadline now set, the clock is ticking for holders of the remaining Gold PCs to act or risk being left with increasingly illiquid assets.

The End of a Foundational Era

For decades, Freddie Mac’s Gold PCs were a foundational element of the secondary mortgage market. These pass-through securities, which represent an ownership interest in a pool of residential mortgages, were known for their 45-day payment delay—the time between when interest accrues on the underlying mortgages and when investors receive their payment. Giant PCs, introduced later, allowed investors to bundle smaller PCs into larger, more easily traded securities, but they retained the same 45-day structure.

This structure, however, stood in contrast to Fannie Mae’s securities, which operated on a 55-day payment delay. This seemingly minor difference was a major factor contributing to market segmentation. Freddie Mac’s securities often traded at a slight discount to Fannie Mae’s, a phenomenon known as the “Freddie Mac concession,” driven by perceived differences in liquidity and trading dynamics, despite both being backed by similar high-quality mortgages and a government guarantee.

The launch of the UMBS in 2019 was designed to erase this inefficiency. By creating a single, common security with a standardized 55-day payment delay, regulators and the GSEs aimed to create a unified, multi-trillion-dollar To-Be-Announced (TBA) market. This market standardization enhances liquidity, tightens pricing, and ultimately lowers borrowing costs for American homebuyers. The exchange offer was the practical mechanism to bring the vast pool of existing Gold PCs into this new, unified ecosystem.

A Final Call for Investors

With the 2026 deadline, the decision for investors is no longer about if they should exchange, but how and when. For those still holding eligible Gold PCs and Giant PCs, failing to act carries significant potential downsides. The primary risk is a sharp decline in liquidity. As the market fully coalesces around the UMBS standard, the pool of buyers and sellers for legacy 45-day securities is expected to shrink dramatically. This could lead to wider bid-ask spreads and make it more difficult and costly to exit positions.

“The closure of the exchange offer solidifies the UMBS as the single, dominant security,” noted one fixed-income market analyst. “Any securities left outside that ecosystem will likely become orphan assets, facing pricing penalties that reflect their diminished tradability.”

To incentivize the transition, Freddie Mac has offered a one-time “float compensation” payment to investors who participate in the exchange. This payment is specifically designed to compensate holders for the 10-day extension in payment delay when converting from a 45-day security to a 55-day UMBS. Investors have been able to execute these exchanges either through a dealer using the Dealer Direct® portal or directly with the GSE via the Tradeweb platform.

Beyond the financial implications, holding onto non-standard securities can create administrative burdens. Portfolio managers would need to continue tracking and managing assets with different payment cycles and characteristics, a complexity the Single Security Initiative was designed to eliminate. The approaching deadline effectively removes the streamlined, GSE-supported pathway for conversion, leaving any future transactions to the uncertainties of a shrinking over-the-counter market.

Culmination of a Market-Wide Overhaul

The closure of the exchange program represents a capstone achievement for the Single Security Initiative, a monumental undertaking steered by the Federal Housing Finance Agency (FHFA). The initiative’s goal was to merge the separate TBA markets for Fannie Mae and Freddie Mac securities into a single, more resilient, and efficient market. By making the securities interchangeable, or fungible, the initiative has largely succeeded in eliminating the historical pricing gap and boosting overall liquidity.

This standardization was made possible by the development of the Common Securitization Platform (CSP), a shared technology infrastructure that both GSEs use to issue and manage UMBS. The success of the UMBS is evident in trading patterns, where investors no longer differentiate between securities issued by the two GSEs, a sign of true fungibility.

By drawing a line in the sand, Freddie Mac is reinforcing the finality of this transition. The move signals that the market has had ample time—over seven years by the time the window closes—to adapt. The periodic reminders planned for 2026 are intended to ensure all remaining holders are aware of the deadline and can take appropriate action to align their portfolios with the modern market structure.

Streamlining for a Unified Future

From Freddie Mac’s perspective, winding down the exchange offer is a logical and strategic step. Maintaining the infrastructure to support both legacy 45-day securities and new 55-day UMBS is operationally complex and resource-intensive. Closing the program allows the enterprise to simplify its product offerings and capital markets strategy, reduce administrative costs, and redeploy resources toward future innovations.

This move solidifies the GSE's full commitment to the UMBS as its primary single-family fixed-rate security. It marks the final phase of a long-term strategic plan to enhance the liquidity and stability of the housing finance system. With the transition phase concluding, Freddie Mac can focus more squarely on its core mission of providing liquidity and affordability to the U.S. housing market within a more streamlined and efficient operational framework.

As the final year of the exchange offer begins, the message to the market is clear: the future of the agency mortgage-backed securities market is unified, and the time to fully embrace that future is now.