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Press Release

Fannie Mae Announces Second Front-End Credit Insurance Risk Transfer Transaction

February 24, 2017

Deal Will Shift a Portion of the Credit Risk on Approximately $15 Billion of Single-Family Loans

Alicia Jones


WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that the company has secured commitments for a new front-end Credit Insurance Risk Transfer (CIRT) transaction. This will be the second CIRT transaction completed on a flow basis, meaning the risk transfer will have been committed prior to Fannie Mae’s acquisition of the covered loans and the insurance coverage will be effective as soon as the loans are acquired. Coverage and pricing are committed for 12 months, beginning with first quarter 2017 deliveries.

The transaction will shift a portion of the credit risk on pools of single-family loans with a combined unpaid principal balance (UPB) of approximately $15 billion to a group of reinsurers. The covered loan pool will consist of 30-year fixed-rate loans with loan-to-value ratios greater than 60 percent and less than or equal to 80 percent. Fannie Mae plans to continue offering its traditional CIRT transactions that cover existing loans in its portfolio. 

“With this transaction, Fannie Mae pioneers new ground by securing the longest and largest forward commitment ever transacted for a GSE risk transfer transaction, locking in our pricing for the full 2017 calendar year,” said Rob Schaefer, Vice President for Credit Enhancement Strategy & Management, Fannie Mae. “This deal also demonstrates our continued market leadership by providing a high level of transparency with respect to the deal pricing and structure.”

Fannie Mae will retain risk for the first 50 basis points of loss on a pool of loans of approximately $15 billion. If this approximately $75 million retention layer is exhausted, the participating traditional reinsurers will cover the next 250 basis points of loss on the pool, up to a maximum coverage of approximately $375 million.

Coverage for these deals will be provided based upon actual losses for a term of 10.5 years from the effective date. Depending upon the pay-down of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the 18th month following the effective date and every 12 months thereafter. The coverage may be canceled by Fannie Mae at any time on or after the 66th month following the effective date by paying a cancellation fee.

Last year, Fannie Mae expanded the transparency of the CIRT program by disclosing the pricing of all CIRT transactions to date.  Pricing for this new and past CIRT transactions can be found at

Since 2013, Fannie Mae has transferred a portion of the credit risk on over $896 billion in single-family mortgages, measured at the time of transaction (including the full contract amount for front-end CIRT transactions), through its credit risk transfer efforts, including CIRT, Connecticut Avenue Securities (CAS), and other forms of risk transfer. Depending on market conditions, Fannie Mae expects to continue coming to market with CIRT and CAS 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

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit and follow us on