As the government shutdown drags on and 800,000 federal workers are going unpaid, experts at Moody's Investors Service issued a note of caution to mortgage lenders of all types, warning of an increase in mortgage delivery risk.
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%. Now, Freddie is back with its first high-LTV mortgage bond of 2015, STACR 2015-HQ1.
"It is important for investors to have this expanded view of credit risk, especially as we continue to grow and evolve our credit risk offerings,” said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac.
STACR-HQ2 was even larger than Freddie Mac's first high LTV offering, with an unpaid principal balance of $33.43 billion and a weighted average LTV of 91.6%, spread across 147,771 loans. It priced tight compared to the first offering.
Before investors begin to sound the alarm on the program’s issues, market analysts expect eminent domain to remain an outlier risk, which, if widespread, could impact valuations drastically — although the likelihood is very low.
Every day, people in your community are looking for a new place to call home. But in the age of the digital shift, they are now getting most of that information from their mobile devices rather than more traditional sources.