October 8, 2019
STACR REMIC (Real Estate Mortgage Investment Conduit) is Freddie Mac’s latest enhancement to its Structured Agency Credit Risk (STACR) program. Issuing future STACR offerings via a trust structure that is treated as a REMIC is expected to deepen and broaden participation in the STACR program. Loans that meet credit risk transfer (CRT) eligibility criteria will serve as the reference pool for STACR REMIC 2019-DNA4, which will price the week of October 14.
How Investors Benefit
Similar to STACR Trust offerings, STACR REMIC securities reduce counterparty risk exposure to Freddie Mac, avoid any disruption of TBA (To-Be-Announced) market, and do not subject international investors to U.S. withholding tax on interest payments on any tranche.
Three additional benefits include:
- The REMIC structure eliminates Commodity Pool Operator (CPO) requirements.
- REMIC regular interests qualify as eligible investments for Real Estate Investment Trusts (REITs).
- STACR REMIC will be offered to certain institutions that are deemed not “U.S. persons” in off-shore transactions in accordance with Regulation S under the Securities Act.
How the Housing Market Benefits
Freddie Mac anticipates that transitioning to REMIC offerings will improve STACR liquidity as more investors are able to participate in the program. This supports Freddie Mac’s overall mission of providing liquidity, stability and affordability in the U.S. housing market.