Freddie Mac has obtained two more reinsurance policies transferring risk of default on mortgages that it insures.
For the first time, these agency credit insurance structure (ACIS) transactions provide coverage based on both first loss and actual losses realized on a reference pool of residential mortgages. These are features that Freddie recently incorporated into another type of transaction that offloads risks to capital markets investors, structured agency credit risk (STACR) notes.
The latest two ACIS transactions move much of the remaining credit risk associated with two STACR issues executed earlier this year.
These two policies cover up to a combined maximum limit of approximately $223 million of losses that Freddie Mac incurs when homeowners default.
"The reinsurance market's response was very good for ACIS coverage expanding to both first loss and actual losses," said Kevin Palmer, vice president of Freddie Mac Single-Family strategic credit costing and structuring.
"We continue to improve our innovative products while supporting the nation's housing markets. We've increased private market participation and have further expanded our panel of both foreign and domestic investors. Combined with our previous ACIS transactions, we have now acquired more than $1.7 billion in additional insurance coverage since 2013."