Freddie Mac announced yesterday a new front-end credit risk transfer offering called Freddie Mac Deep MI CRT. The goal of the program is to offer more coverage beyond the primary mortgage insurance on 30-year fixed-rate mortgages, with 80-95 percent LTVs through a panel of mortgage insurance company affiliates. Transactions are executed via a competitive, transparent auction process.
Freddie Mac has been a leader in introducing new credit risk-sharing initiatives overt the years. Since 2013, the mortgage giant has transferred a massive portion of credit risk on nearly $545 billion of UPB on single-family mortgages.
Kevin Palmer, senior vice president of credit risk transfer at Freddie Mac had issued this statement on the new initiative,
“Deep MI CRT builds on the success of our Agency Credit Insurance Structure (ACIS®) program and is the first credit risk transfer offering in the market with a flow-basis structure on loans purchased from our diverse lender base. The pricing certainty provided by day one coverage offers us an economically sensible way to transfer mortgage credit risk away from taxpayers. Deep MI CRT embodies all the core elements of our single-family credit risk transfer program, and also helps us expand our important relationships with mortgage insurers.
“Risk transfer outside of the capital markets is a meaningful part of our single-family credit risk transfer strategy and we continue to explore options to expand our front-end risk transfer offerings,” Palmer added.
You can find more information about Freddie’s single-family risk sharing offerings available @ http://www.freddiemac.com/creditriskofferings/.