Freddie Mac Requires MGIC to Submit Remediation Plan After Ratings Downgrade

MCLEAN, Va., April 8, 2008  /PRNewswire-FirstCall/ -- Mortgage Guaranty Insurance Corporation (MGIC), a Freddie Mac-approved mortgage insurer, has notified Freddie Mac that it was downgraded by Standard & Poor's from AA- to A with a Negative Outlook.

Under Freddie Mac policies announced on February 13, 2008, the eligibility status of any downgraded mortgage insurer will not automatically change from a Type I to a Type II Insurer.  Instead, a mortgage insurer has up to 90 days to send Freddie Mac a complete remediation plan for restoring its AA- rating, so long as it commits in writing to do so within twenty-four hours of the downgrade.

Freddie Mac will then determine, at its sole discretion, whether or not to impose additional requirements and the nature of those requirements.  Freddie Mac will notify the mortgage insurer of its determination in writing.

Both Type I and Type II mortgage insurers are eligible to insure loans that Freddie Mac already owns as well as loans to be sold to Freddie Mac. Private mortgage insurance enables Freddie Mac to buy mortgages when the borrower makes a downpayment of less than 20 percent of the purchase price.

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. 

DATASOURCE: Freddie Mac



CONTACT:  Brad German of Freddie Mac, [phone]



Web site:  http://www.freddiemac.com/ 

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