Freddie Mac expands ACIS credit risk transfer program

by Francis Monfort08 Jan 2018
Freddie Mac has announced a front-end credit risk transfer offering that expands on its Agency Credit Insurance Structure (ACIS) program.

The ACIS Forward Risk Mitigation (AFRM) offering secures private capital to provide stable pricing through the end of 2019. This allows Freddie Mac to acquire loans while simultaneously transferring mortgage credit risk.

Under the AFRM program, a portion of the mortgage credit risk on pools of single-family loans will be shifted to a panel of reinsurers. The pool has an approximate combined unpaid principal balance of $21 billion, with the reinsurers providing coverage with a maximum limit of approximately $650 million.

The pool will consist of 30-year fixed-rate loans with loan-to-value ratios between 60% and 97%. Freddie Mac said it will continue to offer its core ACIS insurance policies on a programmatic basis.

"AFRM is the first CRT product to secure private capital from investors committed to provide coverage on loans funded over the next two years and represents an important milestone in the expansion of the ACIS program," said Gina Healy, vice president of credit risk transfer. "We'll continue to explore ways to evolve our front-end CRT offerings to transfer more credit risk away from taxpayers and provide investors new ways to invest in the US residential housing market."

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