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Freddie Mac transfers further $618mn of risk to re/insurers

11th January 2019 - Author: Matt Sheehan

The Federal Home Loan Mortgage Corporation (Freddie Mac) has obtained two new re/insurance policies under its Agency Credit Insurance Structure (ACIS) program, providing coverage for approximately $618 million of credit risk.

freddie-mac-logoThe coverage underlies a $66 billion reference pool of mortgages, bringing ACIS credit risk transfer for 2018 to approximately $3 billion limit placed.

“Freddie Mac’s flagship ACIS offerings continue to receive substantial interest from international insurers and reinsurers seeking investment opportunities in the U.S. housing market,” said Gina Healy, Vice President of Credit Risk Transfer at Freddie Mac.

“The strong demand underscores the programmatic nature of our offerings coupled with strong credit performance of the underlying collateral and reinforces our prominent role as a credit risk manager,” she continued.

The two new policies transfer a portion of the remaining credit risk on Freddie STACR 2018-DNA3 pool and STACR 2018-HQA2 pool.

The ACIS 2018-DNA3 policy has a reference pool of single-family mortgages consisting of fixed-rate, single-family mortgages with an original term of 241 to 360 months with LTVs ranging from 60 to 80 percent.

Meanwhile, the ACIS 2018-HQA2 policy has a reference pool of single-family mortgages consisting of fixed-rate, single-family mortgages with an original term of 241 to 360 months with LTVs ranging from 80 to 97 percent.

Freddie Mac has placed approximately $11 billion of re/insurance coverage through more than 40 ACIS transactions, which represents a significant portion of the total $43 billion credit risk it has transferred to investors.

Since 2013, the company has transferred a portion of credit risk on more than $1.2 trillion of unpaid principal balance on single-family mortgages and has grown its investor base to more than 220 unique investors, including insurers and reinsurers.

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