Tag Archives: Credit Risk Transfer

Two and a half years after launching the first credit risk transfer program, Freddie Mac has succeeded in the transferring of a substantial portion of credit risk on more than $385 billion in single-family mortgages.

The latest STACR offering "reflects investors' positive view of the company's credit fundamentals," according to Mike Reynolds, VP of Credit Risk Transfer with Freddie Mac.

The FHFA's conservatorship of Freddie Mac continues, but the GSE has found an effective way to reduce exposure to credit risk while bringing private investors back into the single-family mortgage market.

“Releasing this data now will help give potential credit investors sufficient time to analyze Freddie Mac's actual loss performance,” said Kevin Palmer, SVP of Credit Risk Transfer at Freddie Mac.

Expansion was rare for the GSE's total mortgage portfolio from 2010 to 2014. But in 2015, it has been the norm.

Freddie Mac's latest Structured Agency Credit Risk offering is the Enterprise’s eighth of the year and 17th overall since the program launched in 2013.

Fannie Mae’s credit risk transfer program, Connecticut Avenue Securities (CAS), has sold more than $12.4 billion in securities to private investors, which covers $438 billion worth of mortgage loans since the program’s inception in September 2013. Fannie Mae estimates by the end of 2015, it will have transferred a portion of the credit risk on approximately half a trillion dollars worth of single-family mortgages.

Freddie Mac’s risk-sharing initiatives include 16 STACR debt note offerings (including this one) and 11 Agency Credit Insurance Structure (ACIS) transactions since becoming the first agency to market credit risk transfer transactions with STACR and ACIS in the middle of 2013.

But the success of programs like the Connecticut Avenue Securities (CAS) Series by Fannie Mae and Structured Agency Credit Risk (STACR) debt note offerings by Freddie Mac have ensured that credit risk transfer is not simply a passing trend, but the way of the future for the GSEs look to transfer more credit risk to private investors.

The latest STACR offering, STACR Series 2015-DNA3, is the seventh STACR debt notes offering this year of more than $1 billion by Freddie Mac. It is the 15th STACR offering since the program began slightly more than two years ago. Freddie Mac’s goal is to transfer a portion of its credit risk on single-family loans to private investors.