Fannie Mae reports that it has offloaded the credit risk on mortgage pools totaling more than $1 trillion in unpaid principal to private investors via its risk sharing deals that commenced in 2013.
This includes the company’s benchmark Connecticut Avenue Securities, Credit Insurance Risk Transfer (CIRT) and front-end lender risk sharing transactions. Earlier this month, the company announced that it had secured commitments for its third front-end CIRT transaction, which is to be completed on a “flow” basis, meaning the risk transfer will have been committed prior to Fannie Mae’s acquisition of the covered loans and that the insurance coverage will be effective as soon as the loans are acquired. That deal shifted a portion of the risk on approximately $5.2 billion of single-family loans.
“Fannie Mae’s credit risk sharing program has changed our business model,” says Andrew Bon Salle, executive vice president of single-family mortgage business for Fannie Mae, in a statement. “It’s making us stronger, it’s making the housing finance system stronger, and it’s making taxpayers safer.”
For more information on the government-sponsored enterprises’ front-end credit risk sharing programs, click here and here.