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Freddie Mac Offloads More Risk to Private Investors

Freddie Mac BHFreddie Mac is continuing efforts to offload more risk on single-family loans onto private investors. The GSE priced its fifth offering through the Structured Agency Credit Risk (STACR) program this year and 22nd overall was priced at $795 million, according to an announcement from Freddie Mac on Wednesday.

The STACR program began in July 2013 as a way for Freddie Mac to transfer a portion of credit risk on single-family loans to investors in the private capital market, according to Freddie Mac.

The latest STACR offering, STACR 2016-DNA3, includes a reference pool of newly acquired single-family mortgages with an aggregate unpaid principal balance (UPB) of approximately $26.4 billion, Freddie Mac reported.

With the first 21 offerings, Freddie Mac’s STACR issuances to date covered 29.38 percent of the agency’s total book of business. The Federal Housing Finance Agency (FHFA)’s scorecard for 2016 requires the GSEs to lay off credit risk on 90 percent of their newly-acquired loans in categories targeted for transfer, according to the Urban Institute. The FHFA has been conservator for both Fannie Mae and Freddie Mac since September 2008.

“We created the agency credit securities asset class in 2013 and have since issued more than $15 billion in STACR debt notes,” said Mike Reynolds, vice president of Credit Risk Transfer for Freddie Mac, in early May. “With (STACR 2016-DNA2, priced on May 3), we saw that market conditions have continued to improve from their lows earlier this year.”

“It looks like this asset class is here to stay and is helping us access multiple pockets of capital.”

Kevin Palmer, Freddie Mac

Freddie Mac has three more STACR offerings planned for the remainder of the year for a total of eight in 2016 after issuing eight in 2015, seven in 2014, and two in 2013.

On May 20, Freddie Mac announced that the STACR debt notes program had received the prestigious "RMBS Deal of the Year" award by GlobalCapital, a leading financial news and data service covering the capital markets.

“The agency credit securities market will celebrate its third birthday in June,” said Kevin Palmer, senior vice president of Credit Risk Transfer for Freddie Mac. “It looks like this asset class is here to stay and is helping us access multiple pockets of capital.”

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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