The draft criteria procedure focuses on A.M. Best’s approach to: 1) rating mortgage insurers and 2) assessing the risk charge associated with insurance-based credit risk transfer initiatives by the two government-sponsored enterprises (GSEs), Freddie Mac and Fannie Mae.
Mortgage insurance protects mortgage lenders by ceding a portion of the mortgage risk from lenders to insurers, thus providing an added layer of credit protection should the homeowner default. The draft criteria procedure provides insight into the information requirements, key rating considerations, risk modeling and surveillance activities that generally will be applied by
In the risk-sharing programs discussed in this draft criteria procedure, the GSEs compensate (re)insurance companies for sharing in the mortgage credit risk undertaken by the GSEs. Specifically, these programs are designed to transfer a portion of the credit risks associated with a reference pool of mortgage loans from the GSEs to the (re)insurance market. The draft criteria procedure outlines the process by which
This draft criteria procedure is available at www.ambest.com/ratings/methodology.
Written comments should be submitted by e-mail to firstname.lastname@example.org no later than
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