OVERVIEW Product Summary

Deep MI is an insurance offering to mortgage insurers and their affiliates to transfer additional credit risk on single-family mortgage loans beyond traditional mortgage insurance. Deep MI CRT provides upfront coverage on loans purchased from Freddie Mac’s diverse lender base at the time of funding. Deep MI CRT allows Freddie Mac to attach coverage day 1 instead of 6-to-9 months after funding like the traditional STACR/ACIS transactions.

Deep MI CRT transactions provide an innovative additional opportunity for mortgage insurance companies and affiliates to invest in the credit performance of Freddie Mac's quality Single-Family loans.

Characteristics

  • Deep MI CRT is designed as a 3-layer amortizing insurance structure and is subject to a minimum credit enhancement test
  • Freddie Mac holds the senior risk ("A layer"), which is not sold
  • Freddie Mac may retain all or a portion of the first-loss piece ("B layer")
  • Premiums will be paid monthly in arrears on the M layer balance with a one-time payment covering the acquisition period
  • Includes a forward commitment to provide day 1 coverage on loans purchased by Freddie Mac during the loan acquisition period
  • Contract term is 10 years from the close of the acquisition period and includes a clean-up call
  • A collateral trust account made up of cash and highly liquid assets will be required
  • Mezzanine risk is transferred to (re)insurers ("M layer")

TAKE THE NEXT STEP Want to Learn More?

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

Contact the Freddie Mac Team

Contact the CRT Team

New Transactions & General Inquiries

credit_securities@freddiemac.com(866) 903-2767