Fannie Mae Executes Two Credit Insurance Risk Transfer Transactions on $33 Billion of Single-Family Loans

Rhea-AI Summary

Fannie Mae (OTCQB: FNMA) announced the execution of its seventh and eighth Credit Insurance Risk Transfer™ (CIRT™) transactions of 2022, transferring $1 billion of mortgage credit risk to private insurers. CIRT 2022-7 covers $19.8 billion in loans, while CIRT 2022-8 covers $12.9 billion. The company retains risk on the first 55 to 65 basis points before insurers cover further losses. Since inception, Fannie Mae has secured $21 billion of insurance on $709 billion in loans through the CIRT program, mitigating taxpayer risk and promoting private capital involvement.

Positive

• Completed two major CIRT transactions totaling $1 billion.
• Successfully transferred significant credit risk to private insurers, enhancing taxpayer risk reduction.
• CIRT program has secured approximately $21 billion in insurance coverage, illustrating strong risk management.

Negative

• None.

WASHINGTON, July 22, 2022 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) announced today that it has executed its seventh and eighth Credit Insurance Risk Transfer™ (CIRT™) transactions 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 2022-7 and CIRT 2022-8 transferred $1 billion of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $21 billion of insurance coverage on $709 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 24 insurers and reinsurers that have committed to write coverage for these deals," said Rob Schaefer, Fannie Mae Vice President for Capital Markets.

The covered loan pool for CIRT 2022-7 consists of approximately 64,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $19.8 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired in September 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 2022-7, which became effective June 1, 2022, Fannie Mae will retain risk for the first 55 basis points of loss on the $19.8 billion covered loan pool. If the $109 million retention layer is exhausted, 24 insurers and reinsurers will cover the next 335 basis points of loss on the pool, up to a maximum coverage of $664 million.

The covered loan pool for CIRT 2022-8 consists of approximately 43,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $12.9 billion. The covered pool includes collateral with LTV ratios of 80.01 percent to 97.00 percent acquired between August 2021 and September 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 2022-8, which became effective June 1, 2022, Fannie Mae will retain risk for the first 65 basis points of loss on the $12.9 billion covered loan pool. If the $84 million retention layer is exhausted, 19 insurers and reinsurers will cover the next 275 basis points of loss on the pool, up to a maximum coverage of $354 million.

Coverage for these deals is provided based upon actual losses for a term of 12.5 years. Depending on the paydown of the insured pools and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amounts may be reduced at the one-year anniversary and each month thereafter. The coverage on these deals 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 March 31, 2022, approximately $906 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 Fannie Mae's recent CIRT transaction amount for 2022?

Fannie Mae executed CIRT transactions totaling $1 billion in 2022.

How much total mortgage credit risk has Fannie Mae transferred through CIRT since inception?

Fannie Mae has transferred approximately $21 billion in mortgage credit risk through the CIRT program.

What is the outstanding principal balance covered in CIRT 2022-7 and CIRT 2022-8?

CIRT 2022-7 covers approximately $19.8 billion, while CIRT 2022-8 covers around $12.9 billion.

How many loans are included in the CIRT 2022-7 transaction?

CIRT 2022-7 includes approximately 64,000 single-family mortgage loans.

What are the loan-to-value ratios for the covered pools in CIRT 2022-7 and CIRT 2022-8?

CIRT 2022-7 has LTV ratios of 60.01% to 80.00%, while CIRT 2022-8 has LTV ratios of 80.01% to 97.00%.