Freddie Mac credit risk sharing hits $1 trillion mark

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Freddie Mac hit the $1 trillion mark on credit risk sharing for single-family mortgage loans with its pricing of $1.05 billion Structured Agency Credit Risk 2018-DNA2 Notes.

This marks the second lower LTV deal of the year for Freddie Mac.

"We have transferred a significant portion of mortgage credit risk to private investors on more than $1 trillion of single-family mortgages and we're very proud of reaching this important milestone in our credit risk transfer program," Mike Reynolds, Freddie Mac's vice president of credit risk transfer, said in a press release.

"Our innovation and leadership in CRT is building a better housing finance system for homebuyers and taxpayers, and providing global investors a growing number of opportunities to invest in the U.S. residential housing market," he added.

STACR 2018-DNA2 has a reference pool of single-family mortgages with an unpaid principal balance of about $49.3 billion, according to the company. The reference pool consists of loans with LTVs between 60% and 80%.

Freddie Mac has been on the road to the $1 trillion mark for credit risk transfers since 2013. It has grown its investor base to over 220 unique investors.

Almost exactly a year ago, the original UPB of single-family mortgage credit risk Fannie Mae had transferred since 2013 rose to $1 trillion. At the time, this raised questions on whether investors for risk sharing done through the securities market "will be there if the market turns down," according to Andrew Bon Salle, an executive vice president with oversight of Fannie's single-family mortgage business.

Both government-sponsored enterprises generally share risk with the private market in the form of securities or insurance deals, but also have shared risk with larger lenders.

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Credit risk transfers GSEs Risk management Freddie Mac Fannie Mae