June 13, 2018

Credit Risk Transfer: $1 Trillion Milestone

Credit risk transfer (CRT) is changing the way the U.S. residential housing market is funded — and we're leading the way. As of today, our Single–Family business has transferred credit risk on more than $1 trillion in mortgages. We're proud of this milestone, which is creating a better housing finance system for homebuyers, investors and taxpayers.

Here are the 3 main benefits of credit risk transfer:

  • Shifts credit risk away from taxpayers. This is clearly the biggest benefit. In the past, Freddie Mac transferred the interest rate risk, but retained the credit risk associated with the mortgages we purchased. Today, we're also transferring a significant portion of the mortgage credit risk to private investors. Since we started our credit risk transfer program in 2013, about 40% of our $1.8 trillion single–family portfolio has some type of CRT coverage.
  • Creates new opportunities for investors. Our growing and evolving credit risk transfer program enables us to reach an expanding and diverse investor base, many of which have not historically invested in agency single–family mortgage credit risk. We now have more than 220 unique investors, including money managers, alternate investment funds, insurance and reinsurance companies and real estate investment trusts (REITs). A bigger pool of investors also means we are able to disperse risk more widely.
  • Strengthens the mortgage market. In addition to shielding taxpayers from losses, our strong risk management approach underlying this evolving funding model also helps to build a more robust system that can keep overall mortgage rates low for America's borrowers and lower costs for investors. In addition, it's more flexible and better able to weather dynamic market and economic conditions.

Learn more about how CRT works and how we're transforming the industry.