December 12, 2019Fannie Mae Completes Multi-Tranche Credit Insurance Risk Transfer Transaction on Nearly $10 Billion of Multifamily Loans
WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) announced that it has completed its third and final multi-tranche Multifamily Credit Insurance Risk Transfer (MCIRT™) transaction of 2019 covering a pool of approximately $9.9 billion of existing multifamily loans in the company's portfolio. This new transaction, MCIRT 2019-03, is the seventh Multifamily CIRT transaction as part of Fannie Mae's ongoing efforts to increase the role of private capital in the multifamily mortgage market and mitigate risk for U.S. taxpayers.
"Our most recent multifamily credit risk sharing transaction transferred approximately $293 million of risk to reinsurers and insurers," said Jonathan Gross, Vice President, Multifamily, Fannie Mae. "Looking ahead to 2020 and depending on market conditions, we expect to complete approximately one MCIRT offering per quarter."
The covered loan pool for the transaction consists of 1,042 loans, secured by 1,060 multifamily properties, acquired by Fannie Mae from March 2019 through June 2019. Each loan has an unpaid principal balance of $30 million or less.
With MCIRT 2019-03, which became effective November 1, 2019, Fannie Mae will retain risk on the first 75 basis points of losses on the reference pool. The C tranche will transfer risk to reinsurers covering losses between 75 basis points and 150 basis points. The B tranche will transfer risk to reinsurers covering losses between 150 and 275 basis points. The A tranche will transfer risk to reinsurers covering losses between 275 and 400 basis points. Once the pool has experienced 400 basis points of losses, the credit protection will be exhausted and Fannie Mae will be responsible for any further losses.
Fannie Mae's MCIRT program shares risk with diversified reinsurer and insurer counterparties. It supplements our Delegated Underwriting and Servicing (DUS®) program where originating lenders routinely share approximately one-third of the credit risk on multifamily loans.
Since 2016, in addition to the risk retained by our DUS lender partners, Fannie Mae has transferred a portion of the credit risk on multifamily mortgages with an aggregate unpaid principal balance of more than $71.8 billion through our MCIRT program.
Fannie Mae continues to bring transparency to the market with our new Multifamily CRT website where investors can find our Multifamily Loan Performance Dataset and information about our Multifamily Credit Risk Management structure.
More information on Fannie Mae's credit risk transfer activities is available at: https://www.fanniemae.com/portal/funding-the-market/credit-risk/index.html.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.