A new program from the Federal Home Loan Mortgage Corp. utilizes a panel of mortgage insurance companies to share credit risk.
Freddie Mac is using a new front-end credit risk transfer offering, Freddie Mac Deep MI CRT, according to an announcement Monday.
The pilot credit risk sharing program utilizes
a forward credit insurance policy through a panel of mortgage insurance company affiliates.
Freddie announced the program Monday.
According to the secondary lender, the
structured transaction provides additional coverage beyond the primary mortgage insurance on 30-year fixed-rate mortgages with loan-to-value ratios of between 80 percent and 95 percent.
The coverage is placed immediately upon the sale of the loan to Freddie.
“Transactions are executed via a competitive, transparent auction process,” the notice stated.
Freddie Mac Senior Vice President of Credit Risk Transfer Kevin Palmer explained in the statement that Deep MI CRT is the first credit risk transfer offering in the market with a flow-basis structure on loans purchased from Freddie’s lender base.
“The pricing certainty provided by day one coverage offers us an economically sensible way to transfer mortgage credit risk away from taxpayers,” Palmer said. “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.”
