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Credit Risk Offerings

3 Benefits of Credit Risk Transfer

3 Benefits of Credit Risk Transfer

Credit risk transfer is changing the way the U.S. residential housing market is funded. It has 3 main benefits.

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Freddie Mac is leading the market with initiatives to reduce taxpayer exposure and offer private investors new and innovative ways to invest in the post-crisis creditworthiness of the U.S. residential housing market. Currently Freddie Mac offers three distinct single-family risk sharing initiatives that appeal to a wide variety of investors such as hedge funds, mutual funds, REITS, banks, credit unions, and insurance and reinsurance companies. See how it works.

Freddie Mac Structured Agency Credit Risk (STACR®)

Freddie Mac offers a type of credit security called Structured Agency Credit Risk (STACR) securities. With STACR securities, Freddie Mac intends to reduce its exposure to single-family mortgage credit risk for recently-purchased loans and open the doors for risk transfer to private investors. Through STACR, Freddie Mac is working to minimize potential credit losses and add a layer of protection against taxpayers’ exposure. More

Freddie Mac Agency Credit Insurance Structure (ACIS®)

Freddie Mac will periodically purchase insurance against some of the credit risk associated with its new Single-Family book of business. This type of insurance coverage is intended to attract new sources of private capital from non-mortgage guaranty insurers and reinsurers interested in assuming a portion of the credit risk on specified portions of Freddie Mac’s high-quality Single-Family mortgage loan portfolio. More

Freddie Mac Whole Loan Securities (WLSSM)

Freddie Mac’s newest risk transfer capability, Whole Loan Securities, transfers credit risk to the capital markets through a combination of guaranteed senior and non-guaranteed subordinate classes. WLS features whole loans purchased through Freddie Mac’s cash window and taps into a traditional securitization method in which non-agency mortgage loans have been securitized in the private label market while utilizing Freddie Mac’s underwriting, servicing and quality control standards. Whole Loan Securities builds on Freddie Mac’s award-winning Structured Agency Credit Risk (STACR®) and Agency Credit Insurance Structure (ACIS®) offerings. More

Benefits of Risk Sharing Credit Products & Innovations

  • Provide multiple avenues for sharing mortgage credit risk with a diverse spectrum of private investors.
  • Reduces taxpayer's credit risk exposure to the mortgage industry.
  • Furthers Freddie Mac's strategic goal to develop multiple forms of risk-sharing structures.
  • Aligns with the FHFA 2016 conservatorship goals.

Information Requests

Announcements

Contact Information

If you have a general question, please contact:

Email: credit_securities@freddiemac.com

Freddie Mac New Transactions:

(866) 903-2767

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