Fannie Mae Hits $1 Trillion Milestone for Credit Risk Sharing Transactions
Innovative Credit Risk Sharing Program Reduces Taxpayer Risk and Strengthens the Housing Finance System
WASHINGTON, DC – Fannie Mae (FNMA/OTC) said today that it has transferred to private investors a portion of the credit risk on single-family mortgages with an unpaid principal balance of $1 trillion at the time of the transactions through its credit risk transfer programs since 2013. This includes the company’s benchmark Connecticut Avenue Securities™ (CAS), Credit Insurance Risk Transfer™ (CIRT™), and front-end lender risk sharing transactions. This milestone reinforces Fannie Mae’s commitment to develop broad and liquid markets for credit risk that reduce taxpayer risk, offer an attractive investment option for investors in mortgage credit, and help to build a stronger housing finance system.
“Fannie Mae’s credit risk sharing program has changed our business model. It’s making us stronger, it’s making the housing finance system stronger, and it’s making taxpayers safer,” said Andrew Bon Salle, Executive Vice President, Single-Family Mortgage Business, Fannie Mae. “Fannie Mae is proud to be a leader in a growing market for an entirely new asset class – one that is providing new avenues for investors to support housing opportunities for communities across the country.”
Through Fannie Mae’s market-leading credit risk management capabilities, the company acts as an intermediary between lenders and investors by setting standards, providing credit risk management oversight, and maintaining stability through business cycles. By developing a suite of credit risk-sharing initiatives, the company offers opportunities for financial institutions to invest in the credit performance of its single-family book of business. Fannie Mae provides exceptional transparency to investors through data, resources, and tools available on its website.
Fannie Mae’s credit risk sharing program has been recognized by leading industry publication, GlobalCapital, for successfully navigating the securitization market in 2016. GlobalCapital named Fannie Mae as the “Best Overall Issuer” for both single-family and multifamily products, and “Best RMBS Issuer” for the CAS program. Fannie Mae’s Connecticut Avenue Securities, Series 2016-C01, transaction was named “Best RMBS Deal of the Year” and GlobalCapital recognized Fannie Mae’s single-family loan performance dataset as “RMBS Data Provider of the Year.”
Our Connecticut Avenue Securities (CAS) program was launched in 2013 and created a new market for investing in mortgage credit risk. Fannie Mae’s CAS transactions share credit risk on a portion of newly originated, qualifying mortgage loans that are underwritten using strong credit standards and enhanced risk controls. CAS credit-linked debt notes offer ongoing, programmatic issuance and consistent structures. Multiple dealers make daily secondary markets in CAS and provide research coverage and analytical tools. Loan-level data disclosures and an extensive historical dataset are available to support deal analysis.
Fannie Mae’s Credit Insurance Risk Transfer (CIRT) program is a key risk-sharing vehicle that complements its CAS transactions. Launched in 2014, CIRT transactions transfer a portion of the credit risk on a pool of loans either directly to an insurer that retains that risk, or to an insurance provider that simultaneously transfers that risk to one or more reinsurers that are a significant and attractive source of private capital. Fannie Mae provides pricing disclosure on its website for all CIRT transactions executed to-date.
For more information on Fannie Mae’s credit risk sharing program, visit Fannie Mae’s Credit Risk Sharing website.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 fanniemae.com and follow us on twitter.com/fanniemae.