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Freddie Mac announced a move Wednesday aimed at reducing the risk to the taxpayer associated with its credit exposure in the residential mortgage market. The Enterprise has obtained a number of insurance policies underwritten by a panel of well capitalized insurers and reinsurers. The policies were acquired under Freddie Mac's Agency Credit Insurance Structure, which has a stated goal of providing multiple avenues for sharing mortgage credit risk with a diverse spectrum of private investors in a responsible way that does not reduce liquidity or adversely impact the availability of mortgage credit.
In its 2013 Scorecard goals, Federal Housing Finance Agency instructed both Fannie Mae and Freddie Mac to transfer a significant portion of the credit risk on a minimum of $30 billion of new mortgage securitizations. Both of the GSE's realized these benchmarks using a combination of structured product sales in the capital markets and different types of insurance-based transactions. Now a year later, FHFA is raising the stakes again by requiring the enterprises to triple the effect of their risk mitigation strategy by transferring a substantial portion of the credit risk on $90 billion of new mortgages.
In a filing with the SEC, Suntrust Banks, Inc. announced Thursday afternoon that it would pay up to $320 million to halt a criminal investigation into whether it had dealt inappropriately with homeowners who were looking to take advantage of the Home Affordable Modification Program (HAMP). Several government agencies had been investigating SunTrust in connection with complaints that it misled homeowners who sought mortgage relief from SunTrust through HAMP and failed to timely process HAMP applications.
