Fannie Mae has announced that it priced its second Multifamily Connecticut Avenue Securities (MCAS) transaction as part of the company's ongoing efforts to expand the types of loans covered and promote the continued growth of the credit risk transfer market. MCAS Series 2020-01 is a $425.6 million note offering that complements Fannie Mae's Delegated Underwriting and Servicing (DUS) and Multifamily Credit Insurance Risk Transfer (MCIRT) programs.
"We are excited to bring to market the second MCAS transaction," said Dan Dresser, SVP, Multifamily Capital Markets and Pricing, Fannie Mae. "The MCAS program provides us a sustainable and scalable way to manage capital as well as promote the continued growth of the credit risk transfer market. We are pleased to see positive market reception, especially given the recent market volatility."
Fannie Mae's first two Credit Insurance Risk Transfer transactions of 2020, CIRT 2020-1 and CIRT 2020-2, together cover $30.7 billion in unpaid principal balance of 21-year to 30-year original term fixed rate loans, previously acquired from July 2019 through October 2019. Combined, these two deals transferred nearly $1 billion of mortgage 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. To date, Fannie Mae has committed to acquire approximately $11.6 billion of insurance coverage on $435.2 billion of single-family loans through the CIRT program, measured at the time of issuance, for both post-acquisition (bulk) and front-end transactions.
"Over the past six years we have built a market for credit risk that, with each new transaction, continues to draw on the growing interest of insurers and reinsurers. We appreciate our partnership with the twenty-three insurers and reinsurers that wrote coverage for these deals, a new record-high level of participation for a single CIRT transaction," said Rob Schaefer, VP for Credit Enhancement Strategy & Management at Fannie Mae.
The reference pool for MCAS Series 2020-01 consists of approximately 218 multifamily mortgage loans with an outstanding unpaid principal balance of approximately $12 billion. The reference pool includes first-lien multifamily loans underwritten according to Fannie Mae’s standards and acquired by Fannie Mae from January 1, 2019, through June 30, 2019.
The loans included in this transaction are a combination of fixed-rate and adjustable-rate multifamily mortgages with unpaid principal balances equal to or greater than $30 million and that have terms less than or equal to 12 years, in addition to other select eligibility requirements.
Fannie Mae will retain a portion of the M-7, M-10, and C-E reference tranches in order to align its interests with investors throughout the life of the offering. Fannie Mae will retain the first loss tranche.