Freddie Mac revolutionized U.S. housing finance by establishing a Credit Risk Transfer (CRT) market in 2013

Prior to the housing crisis, Freddie Mac securitized mortgages as participation certificates (PCs) and sold the interest rate risk to investors. Under this business model, Freddie Mac retained 100% of the associated mortgage credit risk.

In 2013, Freddie Mac engineered the STACR program, making them the first GSE to develop a structure to transfer mortgage credit risk to investors. Since then, Freddie Mac has introduced a suite of innovative CRT offerings that enable investors and (re)insurers to engage in the U.S. housing market. CRT has fundamentally changed the nature of housing finance by transferring credit risk from U.S. taxpayers to the private capital markets.

Freddie Mac plays an instrumental role in U.S. housing by providing affordability, stability and liquidity to borrowers, while providing investment options to investors.

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Originate Loans

Lenders include banks, credit unions, mortgage brokers and others.

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Freddie Mac


Freddie Mac overlays its credit risk management framework on purchased loans


Freddie Mac credit risk management services

Freddie Mac structures the credit risk and transfers it to the private capital markets underwriting standards, quality control, servicing policy, servicing monitoring, counterparty management, REO disposition and securitization.

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Private Capital


Investors gain exposure to the U. S. mortgage market

Investors include the money managers, pension funds, insurance companies, hedge funds and others.

Freddie Mac's reference pools are among the industry's largest and most diversified

Freddie Mac's CRT program is backed by its 3-pronged risk management system that is fueled by clean and transparent data. Mortgages are required to meet the credit and underwriting standards of the Freddie Mac Single-Family Seller/Servicer Guide. Freddie Mac continuously collaborates with sellers and servicers to deliver the best results for borrowers and practice the best loss-mitigation practices for investors.

Lenders use Freddie Mac's automated underwriting system, Loan Product Advisor®, and other tools in Freddie Mac Loan AdvisorSM to help in their underwriting of loans in CRT pools. This allows for earlier discovery of underwriting defects.

Once loans are purchased, they are subject to a strict quality control (QC) process that aims at promoting eligibility compliance and manufacturing quality.

CRT issuances undergo internal and third-party due diligence processes.

CRT transfers risk exposure away from U.S. taxpayers and offers an innovative opportunity to investors



$64 billion


$1.7 trillion

Credit Protected


Unique Investors

As of 9/30/2020. Includes STACR, ACIS, certain senior subordination securitization structures, and certain lender risk-sharing transactions and UPB at issuance.

*Others :

  • 5% REITS

    2% Sovereign Funds

  • 5% Insurance

    1% Banks / Credit Unions

CRT appeals to a diverse investor range with many benefits:

Programmatic Issuances: Freddie Mac regularly issues CRT transactions

Data Transparency: Investors have access to Freddie Mac’s Single-Family Loan-Level historical dataset

Loan Advisor: Lenders have used Loan Product Advisor and other tools in Freddie Mac's Loan Advisor in conjunction with their underwriting a majority of loans [?]

Credit Risk Management Practices: All loans are subject to Freddie Mac’s underwriting and quality control standards

TAKE THE NEXT STEP Want to Learn More?

Find out how Credit Risk Transfer creates investor opportunities while strengthening the U.S. mortgage market.

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