Developed in 2013, Structured Agency Credit Risk (STACR®) was the first GSE credit risk transfer program. STACR reduces taxpayer credit exposure through debt notes – unsecured and non-guaranteed bonds – whose principal payments are determined by the delinquency and principal payment performance of a STACR reference pool consisting of recently acquired single-family mortgages from a specified period. Freddie Mac makes periodic payments of principal and interest on the notes, and Freddie Mac benefits from the credit risk transfer through a reduction in note balances for defined credit events in the reference pool. Depending on the specific STACR issuance, reductions of the note balances may be based on a fixed severity or an actual loss model.
STACR transactions will no longer be issued as Freddie Mac debt, but will be issued as STACR Trust and will be issued by a third-party trust. Please see STACR Trust for more information.