Freddie Mac's release of loan-level performance data on some of the mortgages the government-sponsored enterprise owns is a step in the right direction for drawing private capital back into the mortgage market, according to Fitch Ratings.
The data will help pave the way for risk-sharing transactions that will allow the GSE to sell credit risk to the private market and gradually reduce its dominant role in the housing market.
The Federal Housing Finance Agency identified risk-sharing as a key initiative for both Fannie Mae and Freddie Mac.
"Transactions that sell mortgage risk through credit-linked notes or senior/subordinated structures will help the GSEs offload some credit risk and provide market pricing guidance on the credit risk they retain," said Grant Bailey and Rob Rowan of Fitch Ratings.
They added, "The FHFA's initial target of $30 billion in risk-sharing for this year is very small relative to the outstanding balance of GSE-supported mortgages and recent issuance volumes, but we view this as a positive step."