Investments

Freddie MacÕ fourth actual loss risk-sharing deal prices wide

STACR deal offered actual-loss position on reference pool of $34.7 billion

Freddie Mac announced Tuesday that it priced its fourth Structured Agency Credit Risk series offering featuring actual-loss positions.

The deal, STACR Series 2015-DNA3, was Freddie Mac’s seventh STACR deal of 2015 that featured more than $1 billion worth of debt notes.

STACR Series 2015-DNA3 has a reference pool of single-family mortgages acquired from December 2014 through March 2015 with an unpaid principal balance of more than $34.7 billion.

According to Freddie Mac, STACR Series 2015-DNA3 priced wide of its last STACR DNA series deal, STACR Series 2015-DNA2.

The pricing for STACR Series 2015-DNA2 was:

  • M-1 class priced at one-month LIBOR plus a spread of 115 basis points
  • M-2 class priced at one month LIBOR plus a spread of 260 basis points
  • M-3 class priced at one month LIBOR plus a spread of 390 basis points
  • B class priced at one month LIBOR plus a spread of 755 basis points

STACR Series 2015-DNA3 priced wide, with the deal pricing at:

  • M-1 class was one-month LIBOR plus a spread of 135 basis points
  • M-2 class was one month LIBOR plus a spread of 285 basis points
  • M-3 class was one month LIBOR plus a spread of 470 basis points
  • B class was one month LIBOR plus a spread of 935 basis points

STACR Series 2015-DNA2 also priced wide of STACR Series 2015-DNA1.

Under the terms of the STACR Series 2015-DNA3 transaction, Freddie Mac holds the senior loss risk in the reference pool, and a portion of the risk in the Class M-1, M-2, M-3, and the first loss Class B tranche.

J.P. Morgan and Morgan Stanley served as co-lead managers and joint bookrunners for STACR Series 2015-DNA3. Barclays and Credit Suisse were co-managers and Loop Capital was a selling group member. 

"We have demonstrated our ability to execute credit risk transactions on a regular basis with a standard structure and have been transparent in our disclosures," said Mike Reynolds, Freddie Mac vice president of credit risk transfer. "Our loans are subject to Freddie Mac's underwriting standards, internal fraud prevention and quality control review process. We are finding with each issuance that STACR is more diverse, liquid and durable."

Earlier Tuesday, Freddie Mac announced that it recorded a net loss of $475 million for the third quarter of 2015, significantly down compared to net income of $4.2 billion for the second quarter of 2015.

The loss was Freddie Mac’s first quarterly loss in four years.

In a statement, Federal Housing Finance Agency Director Mel Watt said that both Freddie Mac’s and Fannie Mae’s revenue will decrease as they “reduce their retained portfolios and transfer credit risk away from the taxpayers to the private sector,” with transactions such as this recent STACR deal.

Most Popular Articles

NAR bans “pocket listings”

The National Association of Realtors board of directors voted 729-70 on Monday to ban the controversial practice of “pocket listings.”

Nov 12, 2019 By

Latest Articles

Foreclosures rose in October, but are still down for the year

Foreclosures rose 13% in October from September, a new foreclosure market report from ATTOM Data Solutions said. Although foreclosures went up in October over the previous month, they were down 17% from a year ago.

Nov 14, 2019 By