It has been a big week for credit risk transfer transactions. Earlier this week, JPMorgan Chase announced [1] a $1.9 billion residential mortgage-backed securities deal containing all single-family residential mortgages originated by Chase.
Now Fannie Mae has announced [2] its latest contribution to the credit risk transfer space—two Credit Insurance Risk Transfer (CIRT) deals that shift a portion of the credit risk on pools of single-family loans with approximately $19.5 billion in unpaid principal balance—Fannie Mae’s largest cumulative CIRT transaction to date.
“Our CIRT transactions reduce credit risk for Fannie Mae while bringing private capital into the housing market,” said Rob Schaefer, VP for Credit Enhancement Strategy & Management, Fannie Mae. “We’re pleased with the success of our credit insurance transactions and plan to continue to pursue additional risk sharing opportunities through CIRT and our Connecticut Avenue Securities.”
The loans covered in the two deals, named CIRT 2016-1 and 2016-2, are in pools consisting of 30-year fixed-rate loans with LTV ratios between 60 percent and 80 percent. The loans in the transaction were acquired by Fannie Mae from December 2014 through April 2015, according to Fannie Mae.
“We’re pleased with the success of our credit insurance transactions and plan to continue to pursue additional risk sharing opportunities through CIRT and our Connecticut Avenue Securities.”
Rob Schaefer, Fannie Mae
In the last three years, Fannie Mae’s credit risk transfer programs such as CIRT, Connecticut Avenue Series (CAS), and other forms of risk transfer, have resulted in the transferring of a portion of the credit risk of more than half a trillion dollars in single-family mortgages. Fannie Mae launched its credit-risk sharing initiatives in 2013 as a way for private capital to gain more exposure in the U.S. housing market.
Through nine CIRT transactions since the program was introduced in 2014, including the latest CIRT deals announced on Friday, the Fannie Mae has now acquired almost $1.7 billion worth of insurance coverage on more than $66 billion worth of loans.
Click here [3] for more information on Fannie Mae’s credit risk transferring initiatives.