Credit Risk Transfer

Hunton Andrews Kurth has wide-ranging experience in the representation of dealers, initial purchasers and issuers in novel synthetic and asset-backed credit risk transfer transactions.  In connection with these representations, we provide clients with advice regarding evolving and improving their credit risk transfer strategies to best utilize the capital markets while satisfying applicable regulatory requirements and their internal business needs.  Hunton Andrews Kurth has been active in the growing credit risk transfer space and has helped shape the market with representation on first impression deals.

We represent the dealers in all of the synthetic credit risk transfer offerings by Freddie Mac under its Structured Agency Credit Risk (STACRTM) program.  Our representation in the STACR program includes the evolution of the program from a fixed severity loss payment structure to one that allocates losses and payments based on the actual performance of the reference mortgage loans, as well as the transition from direct debt to trust and REMIC issuances.  We also provide advice regarding minimization of US withholding tax risk. 

We also represent the underwriters and initial purchasers in all of the Freddie Mac Seasoned Credit Risk Transfer Trust (SCRT) transactions, which are re-performing residential mortgage loan securitizations.  The SCRT transactions represent a hybrid between private-label securitizations and Freddie Mac’s traditional guaranteed products, and provide an additional credit risk transfer tool to shift credit risk from Freddie Mac to the investors in the related subordinate securities.

Hunton Andrews Kurth also represents the structuring agent and lead manager on Freddie Mac’s Multifamily Structured Credit Risk (SCR) Debt Notes transactions, which are modeled off of the STACR transactions and are linked to the credit and principal payments risk of a reference pool of multifamily mortgage loans backing state and local tax-exempt bonds for which Freddie Mac provides credit enhancement. 

Hunton Andrews Kurth is tax structuring counsel for Fannie Mae’s risk transfer transactions under the Connecticut Avenue Securities (CAS) program for both single family and multifamily transactions. In addition, Hunton Andrews Kurth has worked on the overall structuring of both the Freddie Mac and Fannie Mae credit risk transfer programs since their inceptions.

Our credit risk transfer experience also includes representing initial purchasers in structuring deals for private mortgage insurers that transfer the risk of loss under mortgage insurance policies, which provides reinsurance credits under the GSE Private Mortgage Insurer Eligibility Requirements (the “PMIERs”) capital requirements.  We also act as deal counsel for synthetic securitizations of mortgage pools, revolving and closed end home equity loans, and auto loans, in each case providing structuring, tax and regulatory advice to the protected parties.