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Ratings expected for GSE's future risk-reduction deals

Second Freddie Mac RMBS deal is in the works

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Keeping in line with the Federal Housing Finance Agency’s plan to sell 5% of the illiquid portion of its retained portfolio by the end of the year, Freddie Mac is gearing up for its second deal of the year.

The government-sponsored enterprise is in talks with several credit rating agencies since it hopes to obtain ratings on sales of legacy nonagency securitizations, a spokesperson for the enterprise told HousingWire.

The minimum requirement is for two ratings agencies to issue projected and confirmed ratings on the investment grade mortgages, which will likely consist of adjustable-rate prime mortgages, or Alt-A paper.

Freddie Mac’s first nonagency residential mortgage-backed securitization deal was not rated.

Similarly, Fannie Mae announced on Thursday that it will officially kick off an investor road show for its new ‘risk-sharing’ mortgage-backed securities deal over the next few weeks, according to International Financing Review.

The deal is expected to closely mirror Freddie Mac’s first deal. Similarly, Freddie Mac’s second deal will be in line with its first deal.

The purpose of these risk-sharing mortgage-backed securities deals is to sell off default risk to private investors who are willing to bet on a pool of loans, while further limiting the government's risk.

Investors are encouraging both Fannie Mae and Freddie Mac to share the same structure to make them easily understandable to the market.

Therefore, the deals will follow the format of Structured Agency Credit Risk (STACR) bonds.

In May, investors were focused on Freddie Mac’s first sale of $1 billion nonagency securitizations — all of which were originated before conservatorship and in line with the GSE's mandate to reduce its portfolio size.

All of the collateral was currently in the performing bucket and sold in June. 

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