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Freddie Mac offloads $336 million in credit risk to insurers

Backstops more of year's second risk-sharing deal

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Freddie Mac announced Friday that it obtained a number of insurance policies designed to cover much of the remaining credit risk associated with its second 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.

According to Freddie Mac, this new transaction provides credit loss protection up to a combined maximum limit of approximately $336 million of losses on single-family loans and transfers much of the remaining credit risk associated with the second Structured Agency Credit Risk Series credit risk-sharing deal of 2016, STACR 2016-HQA1.

STACR 2016-HQA1 features debt notes of $475 million based on loans with LTVs between 80% and 95%, and has a reference pool of single-family mortgages with an unpaid principal balance of more than $17.5 billion, Freddie Mac said.

The reference pool is a group of 30-year fixed-rate single-family mortgages acquired by Freddie Mac between April 1, 2015 and June 30, 2015.

With this transaction, Freddie Mac has placed approximately $4.3 billion in insurance coverage through sixteen ACIS transactions since the program's inception in 2013.

"We are very pleased about the continued partnership Freddie Mac has developed with the reinsurance market,” said Kevin Palmer, senior vice president of Single-Family credit risk transfer for Freddie Mac. “This market has proved to be a durable partner for credit risk transfer.” 

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