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Freddie Mac Requires United Guaranty to Submit Remediation Plan After Ratings Downgrade

McLean, VA – United Guaranty Residential Insurance Company (United Guaranty), a Freddie Mac-approved mortgage insurer, has recently notified Freddie Mac that it was downgraded by Standard & Poor's from AA+ to A+ with Negative Implications.

Under Freddie Mac policies announced on February 13, 2008, the eligibility status of any downgraded mortgage insurer will not automatically change from a Type I to a Type II Insurer. Instead, United Guaranty has committed to submit to Freddie Mac a complete remediation plan for restoring a minimum AA- rating within 45 days of the downgrade.

Freddie Mac will then determine, at its sole discretion, whether or not to impose additional requirements and the nature of those requirements. Freddie Mac will notify the mortgage insurer of its determination in writing.

Both Type I and Type II mortgage insurers are eligible to insure loans that Freddie Mac already owns as well as loans to be sold to Freddie Mac. Private mortgage insurance enables Freddie Mac to buy mortgages when the borrower makes a downpayment of less than 20 percent of the purchase price.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

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