Freddie Mac Signs $77 million Risk Share Agreement

Freddie Mac has signed a risk sharingrnagreement with Arch Reinsurance Ltd. Which will cover up to $77.4 million inrnpossible credit losses from a pool of single family loans.  The agreement is similar to one announcedrnlast month between Fannie Mae and National Mortgage Insurance Corporation torncover $5.0 billion in risk.  </p

This new insurance coverage is anotherrninitiative by Freddie Mac to meet a strategic goal set for it and Fannie Maern(the GSEs) to transfer at least $30 billion of its single-family mortgage riskrnto private sources of capital.  ThernFreddie Mac/Arch contract involves a portion of the credit risk of loans fundedrnin the third quarter of 2012. </p

“This is part of our business strategy to expand risk-sharing withrnprivate firms, thus reducing taxpayers’ exposure to losses from mortgagernforeclosures,” said David Lowman, executive vice president ofrnsingle-family business for Freddie Mac. “We have brought to the market newrnsources of capital for transferring mortgage credit risk away from taxpayers.rnWe’ve tapped into the global insurance community’s appetite for U.S. mortgagerncredit exposure, and would like to do more of these policies in thernfuture.” </p

Freddie Mac has sought to further meet the strategic goals, set for the GSEsrnby the Federal Housing Finance Agency (FHFA) with two STACR debt offerings, thernfirst of which closed in July and the second of which was priced last week.

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