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What Color Is Your Angel Puerto Vallarta?

Our first encounter with Mexican road etiquette took place on a busy street in Zona Romatica, Puerto Vallarta. Returning to our trusty auto, we confronted mechanical betrayal due to the human error of leaving on the headlights. After a somewhat...

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Puerto Vallarta: About Your Spanish…

Speaking Spanish The urge to use Google translator should be quelled when attempting to have a conversation in Puerto Vallarta. It might be great for looking up words but for putting together sentences, we recommend classes. Puerto Vallarta ...

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Buyers Ready to Invest in Credit Risk Bonds with Freddie Mac

Freddie Mac

Starting back in July of 2013, Freddie Mac initiated a risk-sharing plan to transfer some amount of their residential mortgages credit-risk exposure from taxpayers. The offering was to attract other sources of capital from the private market, like banks, mutual funds, and insurance companies.

The Structured Agency Credit Worthiness (STACR) debt notes offering has received investment grade ratings from Fitch and Moody’s, and attracted over 50 different investors. Effectively, any investor that bought more than $1 billion in bonds now shares the risk of a portion of losses that could happen if some mortgage borrowers don’t end up repaying their loans.

Freddie Mac is back with another installment (third) of its risk-sharing deals under mortgage credit securitization platform. So far, these credit-risk deals have received an excellent response from the investors and the government enterprise is ready to come up with similar deals in future.

The past few months have witnessed an increase in the investor pool planning to invest in these government bonds. We can expect a regular issuance of similar deals throughout this year and the government plans to increase the credit risk on private investors in small installments.

Key Points of Third Risk-Sharing Deals

  • More than 65 investors are now participating in this offering.
  • Single-A Rated Class Pricing: one-month LIBOR with 100 basis points
  • Triple-B Rated Class Pricing: one-month LIBOR with 220 basis points
  • Unrated Class Pricing: one-month LIBOR with 450 basis points

The most interesting fact is the introduction of three different bonds in the STACR 2014 series with the target to offer additional protection to Freddie Mac and offer healthy combination of products. Freddie Mac anticipates that these product mixtures are among the primary reasons for better response from investors (20+ investors). The earlier offering in 2013 had two different types of product investment options.

The STACR 2014 series has offered better investing flexibility to the investors with an option to exchange between these three classes. It is possible to combine pro-rata components of each of the individual cash flows. At the same time, investors can divest interest from any of these classes and create more bonds with individual margins.

The third installment of risk-sharing deals, STACR 2014, constitutes of 140,000 residential loans with $32.4 Billion in principal balance (unpaid). The 30-year fixed-rate single-family mortgages purchased by Freddie Mac during the second quarter of 2013 are among the subset of this STACR pool.

Transferring Risk good for Taxpayers?

This isn’t the first time Freddie Mac has tried it’s hand at raising capital in the private sector. Over the past 5 years they have been successful at bringing in more than $64 billion dollars through a multi-family K-Deal program. This makes them one of the largest issuers of multifamily structured debt in the US capital markets, putting the overwhelming majority of risk onto the private capital investors that purchase their bonds.

Related: Freddie Mac Housing Report: What’s In-Between the Lines?

What do you think? Is this innovate and forward-thinking of Freddie Mac to transfer the risk off the government and into the private sector? Or is it spelling trouble to not have government more government oversight involved?

The post Buyers Ready to Invest in Credit Risk Bonds with Freddie Mac is property of The BiggerPockets Blog. and is Copyright

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Before the Cruise Ships in Puerto Vallarta

Long before Norwegian Cruise Line, Princess and Carnival Cruises started mooring their ships in Puerto Vallarta, the bay welcomed huge freight vessels. Ships were also the primary form of transportation for people arriving in the port, as w...

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Puerto Vallarta: Be Responsible With Your Pets

Don’t Litter with Litters Most visitors know nothing about the pet population in Puerto Vallarta. They are aware of dogs on the beach, cats on the island in the middle of town but what is really surprising is how little the people who live...

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CHANGES IN MEXICAN TAX LAWS 2014

Yucalandia just published an article regarding the changes in Mexican tax laws affecting foreigners for 2014, which we thought might be useful: Here's a summary of the changes in Mexican tax laws affecting foreigners for 2014. This report co...

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Residential Mortgages In Mexico

There are a variety of Residential loans available in Mexico and there are some great mortgage brokers available that can help you choose the best option for you. Here are just a few of the options currently offered for foreign residents in Me...

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Taking Pictures in Puerto Vallarta

We never tire of gazing at the large photos in the hallways of the restaurant La Palapa, on Los Muertos Beach. We recommend paying a visit; they’re in the back, past the cashier, by the restrooms. Other businesses in town have similar display...

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Watermelon in Puerto Vallarta?

Sandia What a pleasure watermelon is. The color, the sweetness, the crunch, the freshness. We love watermelon. It took us some time to wrap our head around the word sandia, watermelon in Spanish, two words that seem completely unrelated....

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The Vallarta Real Estate Fair 2014

Are you wondering about how the changes in Mexico’s immigration laws will affect you? – How will the new fiscal reforms affect capital gains tax this year? - Are you wondering what loans are available for mortgages in Mexico? - How do prope...

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The Story of Raicilla

Travelers along the western seaboard of Mexico in the vicinity of Puerto Vallarta occasionally happen onto roadside vendors of a moonshine mezcal called Raicilla (rye-see-ya). The name Raicilla was originally used to disguise this type of mezca...

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Puerto Vallarta Loves Equipales

Our favorite thing about equipales is the way they smell. The odors of leather and rosewood linger for years and are usually so strong at the point of purchase; we usually allow them to air out on the patio for a day or two, especially the ...

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Mailboxes Etc. In Puerto Vallarta

If you are contemplating or have already made the big decision to move to Paradise, what will you do about your mail?  What will you do if you want to order products on-line and the company does not deliver to Mexico?  We’ve got you cover...

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Puerto Vallarta: Stand Up and Paddle

Stand Up and Paddle Our first introduction to standing on a surf board with a paddle was a wet one. It took several attempts to learn our balance points but the landing was always soft and forgiving. Stand Up Paddle, known as SUP, has become...

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The best places to look at the stars: Jalisco.

The best places to look at the stars: Jalisco. San Sebastian del Oeste   San Sebastian del Oeste, a small town in Jalisco high up in the sierra, has one of the most transparent atmospheres in the country. From the Cerro de la Bufa, crossing t...

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