Freddie Mac broke new ground last year when it offered even more credit risk with a new risk-sharing deal structure, supported by loans with loan-to-value ratios of 80-95%.
The first high-LTV offering from Freddie, STACR-HQ1, carried an average LTV ratio of 92% and the pool carried a balance of $9.975 billion, spread across 45,112 loans.
STACR-HQ2 was even larger, with an unpaid principal balance of $33.43 billion and a weighted average LTV of 91.6%, spread across 147,771 loans.
Now, Freddie is back with its first high-LTV mortgage bond of 2015, STACR 2015-HQ1.
STACR Series 2015-HQ1 also has loans with LTVs from 80-95% and the deal offers debt notes of $725 million, Freddie said.
According to Freddie, STACR Series 2015-HQ1 features a reference pool of 75,508 recently originated single-family mortgages with an unpaid principal balance of more than $16.5 billion.
The underlying loans of STACR Series 2015-HQ1 carry an average balance of $219,203 and a weighted average original LTV of 92%.
With STACR Series 2015-HQ1, Freddie Mac is also issuing 150 basis points of first loss and rating the M-3 bond. Freddie Mac will hold the senior loss risk in the reference pool and a portion of the risk in the Class M-1, M-2 and M-3, and the first loss Class B tranche.
"We expect routine sales of the higher LTV benchmark HQ series to facilitate more transparency and liquidity in the credit risk transfer market," said Mike Reynolds, Freddie Mac vice president of credit risk transfer.
Earlier this year, Freddie said that it plans to increase its issuance of risk-sharing deals this year. The GSE said that it is planning to offer up six to eight STACR deals in 2015, based on market conditions. That could to lead to an increase in the issuance of risk-sharing deals this year.
According to a recent report from Fitch Ratings, the GSEs issued their first three risk-sharing deals in 2013 with a total reference pool of $84.7 billion. But in 2014, the GSEs upped the risk-sharing ante significantly, issuing 11 total deals with a total reference pool of $369.7 billion.
The GSEs first began offering the credit risk-sharing deals in 2013, as a means to attract private capital back to the mortgage market, and according to Fitch’s data, that’s just what the GSEs have done — to the tune of $454.4 billion.
Freddie also recently announced that it obtained a number of insurance polices designed to cover much of the remaining credit risk associated with three of its STACR deals from 2014.
These three transactions transfer much of the remaining credit risk associated with three STACR deals executed in 2014, up to a combined maximum limit of approximately $707 million of losses on pools of single-family loans acquired in 2013 and the first quarter of 2014, Freddie said in a release.