Fannie Mae Executes Credit Insurance Risk Transfer Transaction on $23.1 Billion of Single-Family Loans

Rhea-AI Summary

On April 19, 2022, Fannie Mae (OTCQB: FNMA) announced its fourth Credit Insurance Risk Transfer™ (CIRT™) transaction for 2022, transferring $844.8 million of mortgage credit risk to private insurers. This move aims to lower taxpayer risk and enhance private capital involvement in the mortgage sector. The covered loan pool includes 76,600 single-family mortgages totaling $23.1 billion. Fannie Mae retains risk for the first 45 basis points of loss, with insurers covering losses up to $844.8 million.

Positive

• Successfully executed CIRT transaction transferring $844.8 million of credit risk.
• Promotes private capital participation in the mortgage market.
• Total insurance coverage acquired since inception stands at $18.4 billion.

Negative

• None.

WASHINGTON, April 19, 2022 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) announced today that it has executed its fourth Credit Insurance Risk Transfer™ (CIRT™) transaction of 2022. As part of Fannie Mae's ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2022-4 transferred $844.8 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $18.4 billion of insurance coverage on $635.6 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions.

"We appreciate our continued partnership with the 22 insurers and reinsurers that have committed to write coverage for this deal," said Rob Schaefer, Fannie Mae Vice President for Capital Markets.

The covered loan pool for CIRT 2022-4 consists of approximately 76,600 single-family mortgage loans with an outstanding unpaid principal balance of approximately $23.1 billion. The covered pool includes collateral with loan-to-value ratios of 60.01 percent to 80.00 percent acquired between June 2021 and August 2021. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.

With CIRT 2022-4, which became effective March 1, 2022, Fannie Mae will retain risk for the first 45 basis points of loss on the $23.1 billion covered loan pool. If the $104.2 million retention layer is exhausted, 22 insurers and reinsurers will cover the next 365 basis points of loss on the pool, up to a maximum coverage of $844.8 million.

Coverage for this deal is provided based upon actual losses for a term of 12.5 years. Depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each month thereafter. The coverage on this deal may be canceled by Fannie Mae at any time on or after the five-year anniversary of the effective date by paying a cancellation fee.

As of December 31, 2021, $750 billion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction.

To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages. This includes Fannie Mae's innovative Data Dynamics^® tool that enables market participants to interact with and analyze both CIRT deals that are currently outstanding in the market and Fannie Mae's historical loan dataset. For more information on individual CIRT transactions, including pricing, please visit our Credit Insurance Risk Transfer webpage.

About Fannie Mae

Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:

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SOURCE Fannie Mae

FAQ

What is the significance of Fannie Mae's CIRT transaction on April 19, 2022?

Fannie Mae executed its fourth CIRT transaction for 2022, transferring $844.8 million of mortgage credit risk to private insurers, reducing taxpayer exposure.

How much mortgage credit risk did Fannie Mae transfer in its CIRT 2022-4 transaction?

Fannie Mae transferred $844.8 million of mortgage credit risk in its CIRT 2022-4 transaction.

What is the total insurance coverage acquired by Fannie Mae through the CIRT program?

Fannie Mae has acquired approximately $18.4 billion in insurance coverage through the CIRT program since its inception.

How many single-family mortgage loans are included in the CIRT 2022-4 transaction?

The CIRT 2022-4 transaction includes approximately 76,600 single-family mortgage loans.

What is the outstanding principal balance of the loans covered in CIRT 2022-4?

The outstanding unpaid principal balance of the loans covered in CIRT 2022-4 is approximately $23.1 billion.