MCLEAN, Va., April 2, 2008 /PRNewswire-FirstCall/ -- Freddie Mac has been notified by Triad Guaranty Insurance Corporation (Triad Guaranty), a Freddie Mac-approved mortgage insurer, that it has been downgraded by Fitch Ratings from AA- to BBB-.
In anticipation of a potential downgrade, Freddie Mac has already held meetings with Triad Guaranty officials to discuss their plans to manage through current market conditions.
Freddie Mac also has decided not to automatically change Triad Guaranty's eligibility status from a Type I to a Type II Insurer under a new Freddie Mac policy announced on February 13, 2008. As part of that policy, Triad Guaranty must send Freddie Mac a written commitment to develop a complete remediation plan for restoring its AA- rating. The commitment must be made within 24 hours of the downgrade.
Triad Guaranty has up to 90 days to submit its remediation plan to Freddie Mac for review and approval. Freddie Mac will then determine, at its sole discretion, whether or not to impose the additional Type II requirements for mortgage insurers. Freddie Mac will notify Triad Guaranty of its determination in writing.
Private mortgage insurance enables Freddie Mac to buy mortgages when the borrower makes a downpayment of less than 20 percent of the purchase price. Compared to Type I Insurers, Type II Insurers must comply with additional capital requirements and operational restrictions to retain their Freddie Mac eligibility.
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible more than 50 million times, ensuring financing for one in six homebuyers and more than four million renters.
