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Press Release

Fannie Mae Executes the First Credit Insurance Risk Transfer Transaction Primarily Covering SF Affordable Loans

July 29, 2019


Alicia Jones


WASHINGTON, DC – Fannie Mae (FNMA/ OTCQB) announced today that it has executed a new Credit Insurance Risk Transfer (CIRT) transaction that, for the first time, covers a pool of primarily Single-Family affordable loans. These covered loans are delivered to Fannie Mae with a short-term, lender repurchase obligation, provided primarily by state Housing Finance Agencies (HFAs), which serves as the initial loan credit enhancement. With this new CIRT transaction, CIRT LR FE 2019-1, Fannie Mae has transferred to a panel of insurers and reinsurers additional credit risk beyond that absorbed by the lender repurchase obligation.

This CIRT transaction provides front-end coverage of loans to be delivered to Fannie Mae over a forward 12-month period plus bulk coverage of existing loans, together insuring up to $1.75 billion of high loan-to-value ratios. In aggregate, the transaction will transfer up to approximately $154 million of credit risk. As part of Fannie Mae's ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, it has committed to acquire about $9.4 billion of insurance coverage on $360 billion of single-family loans through the CIRT program to date.

"This deal pioneered new ground as our first CIRT transaction to cover a targeted pool of single-family affordable loans. We extend our deep appreciation for the insurer and reinsurer partners that work with us on unique deals such as this, along with our HFA and lender partners that originate and deliver these loans to Fannie Mae. Together, they help us serve our affordable housing mission that is at the heart of Fannie Mae's business," said Rob Schaefer, Vice President for Credit Enhancement Strategy & Management, Fannie Mae. "As this deal demonstrates, we continue to diversify our CIRT offerings, and are proud to be a leader in building and supporting the market for transferring Single-Family mortgage credit risk to private sources of capital."

CIRT LR FE 2019-1 secures commitments from a panel of eight insurers and reinsurers to cover up to $1.15 billion in unpaid principal balance for loans to be acquired by Fannie Mae between July 2019 through June 2020. Additionally, this transaction covers approximately $600 million in unpaid principal balance of loans previously acquired by the company between January 2018 through August 2018.

All covered loans will be originated with fixed rate notes, original terms of 21 to 30 years, and loan-to-value ratios greater than 80 percent and less than or equal to 97 percent. Fannie Mae will retain risk for the first 250 basis points of loss on the aggregate covered pool. If the approximately $43 million retention layer is exhausted, reinsurers will cover the next 880 basis points of loss on the pool, up to a maximum coverage of approximately $154 million.

Coverage for this deal is provided based upon actual losses for a term of 10.5 years from the effective date of June 1, 2019. 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 16th month following the effective date and each month thereafter. The coverage on this deal may be canceled by Fannie Mae at any time on or after the 66th month following the effective date by paying a cancellation fee.

A summary of key deal terms, including pricing, for these new and past CIRT transactions can be found at

Since 2013, Fannie Mae has transferred a portion of the credit risk on single-family mortgages with an unpaid principal balance of over $1.8 trillion (including the full contract amount for front-end CIRT transactions), measured at the time of transaction, through its credit risk transfer efforts, including CIRT, Connecticut Avenue Securities (CAS), and other forms of risk transfer. As of March 31, 2019, $1.2 trillion in outstanding unpaid principal balance of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction. 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