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Press Release

Fannie Mae Completes Second Credit Risk Sharing Transaction with Reinsurance Industry

July 14, 2015

Callie Dosberg


WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it has completed an additional credit risk sharing transaction that further diversifies its counterparty exposure and reduces 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. The CIRT transaction also helps meet the 2015 FHFA Conservatorship Scorecard goals related to increasing the role of private capital in the mortgage market through the execution of credit risk transfers. 

“This transaction represents a continuation of Fannie Mae’s efforts to develop innovative ways to transfer risk to the market and leverage the substantial resources and private capital of the reinsurance industry.  Our CIRT transactions complement the significant credit risk transfer that we continue to execute through our Connecticut Avenue Securities, and help protect U.S taxpayers from credit losses,” said Rob Schaefer, vice president for credit enhancement strategy & management.  “We are pleased that this form of risk transfer has been well received by the market and, based on the indicated support by the reinsurers, we intend to bring similar transactions to the market in the future.” 

In this transaction, CIRT-2015-1 which became effective June 1, 2015, Fannie Mae retains risk for the first 50 basis points of loss on a $4.68 billion pool of loans. If this $23.4 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 $117 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 2013. 

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

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