Freddie Mac Reduces Taxpayer Exposure With $269.5 Million Credit Risk Insurance Policies
April 24 2014 - 3:38PM
Marketwired
Freddie Mac Reduces Taxpayer Exposure With $269.5 Million Credit
Risk Insurance Policies
MCLEAN, VA--(Marketwired - Apr 24, 2014) - Freddie Mac (OTCQB:
FMCC) announced today that it has obtained insurance policies
underwritten by a group of well-capitalized and established
insurers and reinsurers. The policies cover up to a combined
maximum of $269.5 million of losses for a portion of the
credit risk associated with a pool of Single-Family loans funded in
the first quarter of 2013.
The policies were obtained under Freddie Mac's Agency Credit
Insurance Structure (ACIS), which has attracted private capital
from non-mortgage guaranty insurers and reinsurers. It further
demonstrates the company's business strategy to expand risk sharing
with private firms to reduce taxpayers' exposure to mortgage
losses.
"We have a good start on our goal to provide multiple avenues
for sharing mortgage credit risk with a diverse spectrum of private
investors," said Kevin Palmer, vice president of Single-Family
strategic credit costing and structuring for Freddie Mac. "Global
reinsurers represent a large source of capital, and they are
interested in expanding their product line to cover Single-Family
mortgages. This year, we expect to execute multiple insurance
transactions and bring in additional insurance and reinsurance
companies."
In addition, earlier this month Freddie Mac co-hosted with Aon
Benfield a reinsurer industry day where representatives from 13
foreign and U.S. based reinsurance companies learned how Freddie
Mac manages its residential mortgage risk. Palmer added,
"Transferring some of our Single-Family risk to large, diversified
global insurance and reinsurance companies help us to better manage
our risk."
Freddie Mac has led the market in introducing new risk-sharing
initiatives with four STACR debt note offerings and now two ACIS
transactions involving three policies. The first ACIS occurred in
Nov. 2013 and covered up to $77.4 million in credit losses. Through
STACR and ACIS, Freddie Mac has laid off loss risk on more than $95
billion in qualifying Single-Family mortgages.
Freddie Mac was established by Congress in 1970 to provide
liquidity, stability and affordability to the nation's residential
mortgage markets. Freddie Mac supports communities across the
nation by providing mortgage capital to lenders. Today Freddie Mac
is making home possible for one in four home borrowers and is one
of the largest sources of financing for multifamily
housing. Additional information is available at
FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog
FreddieMac.com/blog.
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