Brought to you by
KIRO Radio's Tom Kelly digs deep into the Puget Sound real estate market
Real Estate

Freddie Mac takes a bigger jump to insure loans

Mortgage giant Freddie Mac is offsetting loan risks for the first time by tapping the reinsurance industry to cover potential losses on loans it guarantees, The Wall Street Journal reported. The move is a way to share risk with private investors.

Reinsurance is purchased by an insurance company from one or more other insurance companies as a means of risk management.

Freddie Mac, a government-controlled entity, announced this week that it purchased an insurance policy from a reinsurance unit of Arch Capital Group Ltd. The policy will cover up to $77.4 million in credit losses on a pool of loans that Freddie acquired in the third quarter of 2012.

Freddie's new focus on the reinsurance industry is a way to increase more private investors in the mortgage market and reduce potential risks to taxpayers, according to the Journal. The Federal Housing Finance Agency, which oversees Freddie and Fannie Mae, has mandated that the two companies find multiple types of investors to share the risks in protecting against potential home owner defaults.

In a similar transaction in October, Fannie Mae teamed with National Mortgage Insurance Corp. to cover a pool of $5 billion in home loans.

Top Stories

  • Seahawks Schedule
    The Seahawks have released the 2014 regular-season schedule

  • Save the Buses?
    A group is gathering signatures to save transit, but Michael Medved has another solution

  • 21 and Over
    If 21 is the legal age for alcohol and marijuana, why not cigarettes?
ATTENTION COMMENTERS: We've changed our comments, but want to keep you in the conversation.
Please login below with your Facebook, Twitter, Google+ or Disqus account. Existing MyNorthwest account holders will need to create a new Disqus account or use one of the social logins provided below. Thank you.
comments powered by Disqus
Mortgage Calculator
Enter Your Details & Click the Calculate Button
Loan Amount $
Annual Interest Rate %
Term of Loan Years
Number of Payments
Monthly Payment $
Brought to you by

This is not a commitment to lend. Terms subject to change without notice. Applicant must qualify to receive credits. A division of Pinnacle Capital Mortgage Corp. WA CL 81395, Equal Housing Lender, MLO 70765.
Listen to the show
Hear Real Estate Today on KIRO Radio
Join Tom Kelly every Sunday at 9am on KIRO Radio to talk Puget Sound real estate.

Sign up for breaking news e-mail alerts from
In the community
Do you know a student who stands out in the classroom, school and community?
Help make their dreams come true by nominating them for a $1,000 scholarship and a chance to earn a $10,000 Grand Prize. Brought to you by KIRO Radio and Comprehensive Wealth Management.

Do you know an exceptional citizen who has impacted and inspired others?
KIRO Radio and WSECU would like to recognize six oustanding citizens this year. Nominate them to be recognized and to receive a $2,000 charitable grant.