Optimizing/maximizing regen braking in a hybrid electric vehicle (HEV) is one of the key features for increasing fuel economy. However, it is known  that maximizing regen braking by braking the rear axle on a low friction surface results in compromising vehicle stability even in a vehicle which is equipped with an ESP (Enhanced Stability Program). In this paper, we develop a strategy to maximize regen braking without compromising vehicle stability. A yaw rate stability control system is designed for a hybrid electric vehicle with electric rear axle drive (ERAD) and a “hang on” center coupling device which can couple the front and rear axles for AWD capabilities. Nonlinear models of the ERAD drivetrain and vehicle are presented using bond graphs while a high fidelity model of the center coupling device is used for simulation. A robust yaw rate stability controller, utilizing Youla parameterization, is proposed which uses the center coupling device to distribute regen braking torque from the rear axle to the front axle while using the maximum amount of regen braking possible to help improve fuel efficiency. It is shown through simulation studies that the proposed controller stabilizes a vehicle cornering whilst braking on a low friction surface while using the maximum amount of regen braking possible. The controller is also shown to be robust to time delays in the system. The resulting control system helps improve overall fuel efficiency during all braking maneuvers by maximizing the amount of regen braking available from the system at any given time.