Fannie Mae Executes First Credit Insurance Risk Transfer Transaction of 2024 on $9.0 Billion of Single-Family Loans

Rhea-AI Summary

Fannie Mae (FNMA) executed its first Credit Insurance Risk Transfer transaction of 2024, transferring $355.6 million of mortgage credit risk to private insurers. The deal covers a pool of 28,000 single-family mortgage loans with an unpaid principal balance of $9.0 billion. The transaction includes fixed-rate, 30-year term mortgages with LTV ratios of 60.01% to 80.00%. Fannie Mae retains risk for the first 150 basis points of loss, with reinsurers covering the rest up to $355.6 million over an 18-year term.

WASHINGTON, March 1, 2024 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) announced today that it has executed its first Credit Insurance Risk Transfer™ (CIRT™) transaction of 2024. CIRT 2024-L1 transferred $355.6 million of mortgage credit risk to private insurers and reinsurers.

"CIRT 2024-L1 begins another active year of CIRT issuance for Fannie Mae," said Rob Schaefer, Fannie Mae Vice President, Capital Markets. "We appreciate the support of the 24 insurers and reinsurers that committed to write coverage and supported the extension of the CIRT maturity term on this deal to 18 years, from the 12.5-year term that had been utilized for most CIRT deals executed since 2019."

The covered loan pool for CIRT 2024-L1 consists of approximately 28,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $9.0 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired between January 2023 and April 2023. 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.

Beginning with this transaction, CIRT deals that cover existing pools of low-LTV loans will be identified by prefacing the CIRT deal number with the letter 'L,' and CIRT deals that cover existing pools of high-LTV loans will be identified by prefacing the CIRT deal number with the letter 'H.'

With CIRT 2024-L1, which became effective January 1, 2024, Fannie Mae will retain risk for the first 150 basis points of loss on the $9.0 billion covered loan pool. If the $135.1 million retention layer is exhausted, 24 reinsurers will cover the next 395 basis points of loss on the pool, up to a maximum coverage of $355.6 million.

Coverage for this deal is provided based upon actual losses for a term of 18 years. Depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent, the 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.

Since inception to date, Fannie Mae has acquired approximately $26.2 billion of insurance coverage on $879.2 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. As of December 31, 2023, approximately $1.29 trillion in outstanding unpaid principal balance 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 specific 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:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

Fannie Mae Newsroom
https://www.fanniemae.com/news

Photo of Fannie Mae
https://www.fanniemae.com/resources/img/about-fm/fm-building.tif

Fannie Mae Resource Center
1-800-2FANNIE

View original content to download multimedia:https://www.prnewswire.com/news-releases/fannie-mae-executes-first-credit-insurance-risk-transfer-transaction-of-2024-on-9-0-billion-of-single-family-loans-302077460.html

SOURCE Fannie Mae

FAQ

What is the latest CIRT transaction announced by Fannie Mae?

Fannie Mae announced its first Credit Insurance Risk Transfer transaction of 2024, known as CIRT 2024-L1, transferring $355.6 million of mortgage credit risk to private insurers.

How many mortgage loans are covered in the CIRT 2024-L1 deal?

The CIRT 2024-L1 deal covers approximately 28,000 single-family mortgage loans.

What is the total unpaid principal balance of the loans covered in the CIRT 2024-L1 deal?

The total unpaid principal balance of the loans covered in the CIRT 2024-L1 deal is approximately $9.0 billion.

What type of mortgages are included in the CIRT 2024-L1 transaction?

The CIRT 2024-L1 transaction includes fixed-rate, generally 30-year term, fully amortizing mortgages.

How long is the term of coverage for the CIRT 2024-L1 deal?

The coverage for the CIRT 2024-L1 deal is provided for a term of 18 years.