Freddie Mac Reduces Taxpayer Exposure With $155 Million Credit Risk Insurance Policies
Freddie Mac Reduces Taxpayer Exposure With 5 Million Credit Risk Insurance Policies
MCLEAN, VA–(Marketwired – Dec 17, 2014) – In a further expansion of its risk sharing initiatives beyond the capital markets, Freddie Mac (OTCQB: FMCC) announced today that it has obtained a number of insurance policies under its Agency Credit Insurance Structure (ACIS), which has attracted commitments of private capital from non-mortgage guaranty insurers and reinsurers. These policies, underwritten by a panel of insurers and reinsurers, cover up to a combined maximum of approximately $ 155 million of losses for a portion of the credit risk associated with a pool of Single-Family loans acquired in the third quarter of 2013.
“This transaction is backed by a mix of new and returning participants,” said Kevin Palmer, vice president of Freddie Mac’s Single-Family strategic credit costing and structuring. “These policies further demonstrate Freddie Mac’s business strategy to expand risk sharing with private firms to reduce taxpayers’ exposure to mortgage losses.”
Palmer added, “ACIS demonstrates an alternative to risk transfer outside of the capital markets that we believe will be a meaningful part of our future risk transfer strategy. ACIS transfers a portion of the remaining credit risk associated with STACR reference pools to a diversified set of insurance and reinsurance companies around the globe, some of which are among the largest and best-capitalized in the industry.”
Freddie Mac has led the market in introducing new risk-sharing initiatives with nine STACR debt note offerings and now four ACIS transactions since mid-2013. Through STACR and ACIS, Freddie Mac has laid off a substantial portion of credit risk on more than $ 205 billion of UPB in Single-Family mortgages.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.