Arch creates new mortgage pilot scheme

Arch Capital Group has teamed up with Freddie Mac to pilot a new mortgage credit risk transfer program, deemed “IMAGIN” (Integrated Mortgage Insurance), to attract a diversified and robust capital base to the US housing market, in a highly efficient structure, that will support market stability through economic cycles.

Arch said that it had committed itself towards delivering traditional and innovative mortgage risk transfer products that provide meaningful and affordable capacity to the US housing sector.

Arch has established a new Washington DC based subsidiary, Arch MRT, which will insure Freddie Mac and transfer 100 percent of the risk assumed to a panel of diversified, well-capitalised, and highly rated (re)insurers that provide high quality collateral assets in trust.

The company said that this arrangement encourages additional participants and capital to support first-loss exposure in mortgages. The high quality panel of (re)insurers will competitively bid, through a transparent process, to provide, over the long term, lower cost mortgage insurance for borrowers.

Arch added that it remains committed to providing mortgage risk transfer solutions across many offerings such as primary mortgage insurance through Arch Mortgage Insurance Company, credit risk transfer transactions (CRT), MRT, and other forms of protection as the marketplace evolves.