Fannie Mae Executes its Ninth Credit Insurance Risk Transfer Transaction of 2022 on $21 Billion of Single-Family Loans

Rhea-AI Summary

Fannie Mae (OTCQB: FNMA) has completed its ninth Credit Insurance Risk Transfer™ (CIRT™) transaction for 2022, transferring $700 million of mortgage credit risk to private insurers. This initiative aims to reduce taxpayer risk while increasing private capital in the mortgage market. The covered pool includes approximately 69,000 loans with a total unpaid principal balance of $21 billion. Fannie Mae retains risk for the first 55 basis points of loss, with insurers covering further losses up to $700 million.

Positive

• Successfully transferred $700 million of mortgage credit risk, enhancing private capital participation.
• Increased total insurance coverage to approximately $22 billion on $730 billion of loans since inception of the CIRT program.
• The transaction allows Fannie Mae to manage risk more effectively, supporting its objectives.

Negative

• None.

WASHINGTON, Sept. 22, 2022 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) announced today that it has executed its ninth 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 2022-9 transferred $700 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $22 billion of insurance coverage on $730 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 23 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 2022-9 consists of approximately 69,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $21 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired in October 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 2022-9, which became effective August 1, 2022, Fannie Mae will retain risk for the first 55 basis points of loss on the $21 billion covered loan pool. If the $115 million retention layer is exhausted, 23 insurers and reinsurers will cover the next 335 basis points of loss on the pool, up to a maximum coverage of $700 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 June 30, 2022, approximately $1.02 trillion 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 Fannie Mae's recent CIRT transaction?

Fannie Mae executed its ninth CIRT transaction of 2022, transferring $700 million of mortgage credit risk.

How much mortgage credit risk has Fannie Mae transferred since the start of the CIRT program?

Since its inception, Fannie Mae has transferred approximately $22 billion of mortgage credit risk through the CIRT program.

What is the total value of loans involved in CIRT 2022-9?

CIRT 2022-9 covers approximately 69,000 single-family mortgage loans with an unpaid principal balance of about $21 billion.

When did the CIRT 2022-9 transaction become effective?

The CIRT 2022-9 transaction became effective on August 1, 2022.

What risk does Fannie Mae retain in the CIRT 2022-9 transaction?

Fannie Mae retains risk for the first 55 basis points of loss on the $21 billion covered loan pool.