Freddie Mac completes $300m reinsurance transaction
The US Federal Home Loan Mortgage Corporation, Freddie Mac has auctioned off a pool of residential mortgage insurance contracts in a deal which will provide a maximum limit of up to approximately $300 million of losses on single-family loans under its Agency Credit Insurance Structure (ACIS) programme.
ACIS 2018-SAP1 transfers credit risk on a $19.1 billion pool of 15 and 20-year mortgages purchased between May 1, 2017 and Feb. 28, 2018.
The deal marks the fourth transaction executed in 2018 under the ACIS programme this year.
“The ACIS programme has been instrumental in attracting institution-based capital through reinsurers to CRT (credit-risk transfer), and our innovations are making it a growing part of Freddie Mac’s robust toolbox to transfer mortgage credit risk away from taxpayers,” said Gina Healy, vice president of credit risk transfer.
“Reinsurers are increasingly supporting various forms of credit risk transfer, including front-end risk transfer through our new ACIS AFRM programme that provides pricing stability and committed capital over a two-year horizon as well as the ACIS ARMR programme which transfers additional risk on the legacy portfolio,” Healy noted.
“These innovations are attracting more private capital to the market, as evidenced by the important $1 trillion credit risk transfer programme milestone we recently reached. And we’re not stopping here. We’re already exploring new ways to make the housing finance system better for homebuyers, investors and taxpayers,” she added.
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