Changes Proposed to CAS and STACR Programs


On May 8, 2017, Fannie Mae and Freddie Mac announced that they are considering certain changes to the structure of their CAS and STACR note programs in order to widen the investor base for the notes through which they transfer credit risk to the private sector. The proposed changes to CAS and STACR will also require certain changes to the tax structure of Fannie and Freddie MBS issuances. The intention is, despite the changes to the MBS tax structure, to preserve TBA eligibility of the MBS.

As proposed, a REMIC tax election will be made on mortgage loans purchased by Fannie and Freddie and put into their MBS. As a result, the MBS would, for tax purposes, represent ownership interests in REMIC regular interests rather than in mortgage loans. The CAS/STACR notes would also represent ownership of REMIC regular interests issued by new CAS/STACR trusts, which will make the CAS and STACR notes more attractive to REITs and foreign investors. The new structure would also eliminate Fannie and Freddie counterparty risk in the credit risk transfer programs.

Fact Sheets and FAQs are linked to the Press Releases. Press Release (Fannie). Press Release (Freddie).