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Freddie Mac obtains insurance policies to backstop more loans

Transfers credit risk to insurance companies

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Freddie Mac announced Monday that it obtained more insurance policies designed to cover much of the remaining credit risk associated with its first Structured Agency Credit Risk transactions of 2016.

Freddie Mac obtained the insurance policies under its Agency Credit Insurance Structure, which is intended to attract private capital from non-mortgage guaranty insurers and reinsurers.

This new transaction provides up to a combined maximum limit of approximately $450 million of losses on single-family loans and transfers much of the remaining credit risk associated with the first STACR debt issuance this year, STACR 2016-DNA1, which was announced in early January.

STACR Series 2016-DNA1 has a reference pool of recently acquired single-family mortgages with an unpaid principal balance of more than $35.7 billion.

According to Kevin Palmer, senior vice president of single-family credit risk transfer for Freddie Mac, this latest ACIS deal was supported by the largest panel of insurers and reinsurers to date.

"We continue to increase the diversity of private capital investors in our credit risk transfer offerings and have built strong relationships with a growing number of ACIS insurers and reinsurers," Palmer said. "ACIS continues to play an important role in our credit risk transfer strategy, and we expect to have these transactions on a regular basis."

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