Freddie Mac offloads $285m in credit risk to insurers

Risk-transfers "significant portion" of $16bn pool of 15-year mortgages

Freddie Mac announced Tuesday that it closed out 2016 by obtaining an insurance policy that could cover a combined maximum limit of approximately $285 million of credit losses.

According to Freddie Mac, the insurance policy, obtained as part of the company’s Agency Credit Insurance Structure program, transfers a “significant portion” of credit risk on a $16 billion pool of 15-year mortgages purchased by the government-sponsored enterprise during the first nine months of 2016.

In a release, Freddie Mac said that this ACIS transaction is the second such transaction to not be linked to Structured Agency Credit Risk debt note bonds, which are another form of GSE risk-sharing.

Since the ACIS program’s inception in 2013, Freddie Mac has obtained more than $6 billion in insurance coverage through 24 ACIS transactions, the GSE said.

“We are pleased with the continued expansion of our broker relationships, which has supported the steady growth of the ACIS program,” said Gina Subramonian Healy, Freddie Mac’s vice president of credit risk transfer.

“This important network has not only helped us to educate and gain access to new markets but also strengthen our overall program,” Subramonian added.

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