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52 FREDDIE MAC BUSY OFFLOADING MORE CREDIT RISK In an effort to off load more risk to ta xpayers on its single-family mortgages, Freddie Mac began its Structured Agency Credit R isk (STACR) program in 2013 and soon expanded its credit risk offerings with its Agency Credit Insurance Structure (ACIS) and W hole Loan Securities ( W LS) programs with the same goal in mind. Freddie Mac recently announced that bet ween these three programs, it transferred risk on $215 billion worth of single-family mortgages for the full year of 2016 while providing approximately $8.25 billion in loss protection to ta xpayers during the year—$5.5 billion in STACR issuances, $2.7 billion in ACIS transactions, and $500,000 in W LS. "It was a ver y good year for Freddie Mac's single-family credit risk transfer program," said Kevin Palmer, SV P of single-family portfolio management. "Investor demand was strong across all our offerings in 2016 -- STACR, ACIS and W LS—and we now have more than 200 unique investors in our program. It's clear that credit risk transfer is becoming a permanent f ixture in the f ixed-income and reinsurance markets." Palmer continued, " We look for ward to being in the market regularly with our current offerings in 2017. At the same time, we' ll continue to work toward our strategic goal to explore new asset classes for investors that protect ta xpayers and meet our core key principals of credit risk transfer." To date, Freddie Mac has provided approximately $25 billion in loss protection to ta xpayers while transferring risk on approximately $602 billion worth of single- family mortgages since launching STACR in 2013. Approximately $18.2 billion of that has been through STACR issuances, $6.2 billion through ACIS transactions, and $1 million through W LS. RISING DEFAULT RATES NOT INDICATIVE OF ECONOMY'S HEALTH Default rates are up for mortgage loans nationwide along with other types of consumer credit such as bank cards and auto loans, according to the most recent S&P Dow Jones Indices released by S&P Global and Experian on January 17. Despite the increases in default rates, their levels still point to an economy on the mend, according to one analyst. According to the Indices, the country's composite default rate went up two basis points in December 2016, while the mortgage defaults rose one basis point, bank card rate jumped 14 points, and auto loan defaults three points. Four of the five major cities monitored by the Indices also saw default rates jump for the month. Miami default rates rose nine basis points, Chicago and Los Angeles rose two, and Dallas rose one. New York City was the only city to see a decrease, with the default rate dropping four basis points month over month. Miami's default rate, which is at a 30-month high of 1.53 percent, is likely due to the high number of first-time buyer mortgage defaults seen in the city. "Among the five cities reported on each month, Miami has a larger and increasing first mortgage foreclosure rate," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "Home prices in Miami, as in most cities, have recovered from the financial crisis. However, Miami home prices, as measured by the S&P CoreLogic Case-Shiller Home Price Index, as of October 2016 were 22 percent below their December 2006 peak, while nationally, home prices have recently surpassed the pre-crisis peak set in July 2006. Florida also lags national trends in other measures—it is among the five states with the most foreclosures in 2016." "National average consumer credit default rates continue at low levels in an improving economy," Blitzer continued. "Auto and light truck sales were up each month since August as automobile consumer credit defaults held steady. Bank card sector defaults ticked up slightly in the last two months, reversing five months of flat to down reports. is may reflect rising retail since the spring and larger consumer credit extensions in October and November." Mortgage default rates, though slightly up, "are also stable," Blitzer said. However, that could change further into 2017. "is favorable picture is likely to be tested by rising interest rates," he said. THE LEADER IN DEFAULT SERVICING NEWS Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.

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