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Press Release

Fannie Mae Announces Latest Credit Risk Sharing Transaction with Reinsurance Industry

September 24, 2015

Company Continues to Lead Risk Sharing Transactions with Reinsurers, Attracts International Reinsurer Again

Callie Dosberg


WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it has completed its latest credit risk sharing transaction, continuing efforts to reduce taxpayer risk by increasing the role of private capital in the mortgage market. The Credit Insurance Risk Transfer (CIRT) transaction shifts credit risk on a pool of loans to a panel of reinsurers. For the second time since the program’s inception in 2014, an international reinsurer participated in this type of Fannie Mae risk sharing transaction. 

“As the leading manager of single-family residential credit risk in the industry, we are focused on building a safer, sustainable housing system and our CIRT deals help these efforts,” said Rob Schaefer, vice president for credit enhancement strategy & management. “Reinsurers seem to understand and appreciate our approach to managing credit risk and as a result, we’ve seen continued interest in our CIRT program. We look forward to exploring new ways to structure these transactions in the future and to growing the program and the number of reinsurers we work with as well.”

In this transaction, CIRT-2015-3 which became effective August 1, 2015, Fannie Mae retains risk for the first 50 basis points of loss on a $7 billion pool of loans. If this $35.2 million retention layer were exhausted, reinsurers would cover the next 250 basis points of loss on the pool, up to a maximum coverage of approximately $176.2 million. Coverage is provided based upon actual losses for a term of 10 years. Depending upon the pay down of the insured pool and the amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the 3-year anniversary and each anniversary of the effective date thereafter.  The coverage may be canceled by Fannie Mae at any time after the 5-year anniversary of the effective date by paying a cancellation fee. 

The reference loan pool for the transaction consists of 30-year fixed rate loans with loan-to-value (LTV) ratios greater than 60 percent and less than or equal to 80 percent. The loans were acquired by Fannie Mae from September through December of 2014.

In addition to the CIRT program, Fannie Mae continues to reduce risk to taxpayers through its flagship Connecticut Avenue Securities (CAS) program and other forms of risk transfer. Through both CIRT and CAS, Fannie Mae has sold a portion of the credit risk on approximately 60 percent of recent acquisitions and on approximately $419 billion of loans in recent years. These transactions are structured so that if the covered loans experienced the same stress as the most recent housing crisis, Fannie Mae’s projected losses would be limited to the small first-loss piece of credit risk retained by the company.  Fannie Mae expects to continue coming to market with CAS and CIRT deals that allow private capital to gain exposure to the U.S. housing market.

More information on Fannie Mae’s credit risk transfer activities is available at

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