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Fannie and Freddie Transfer Risk on $281.4B of UPB

Fannie Mae and Freddie Mac transferred 84% and 89%, respectively, of the allocated credit risk capital on 2018 acquisitions covered by credit risk transfer, according to the Federal Housing Finance Agency (FHFA) has issued its semi-annual Credit Risk Transfer Progress Report. [1]

In the first half of 2019, the GSEs transferred risk on $281.4 billion of UPB with a total Risk in Force (RIF) of $10.5 billion. Securities issuances accounted for 56% of RIF, reinsurance transactions accounted for 26% of RIF, and lender risk sharing accounted for 18% of RIF.

Additionally, the FHFA measured the foreclosure prevention actions undertaken by Fannie Mae and Freddie Mac in its FHFA Foreclosure Prevention, Refinance and FPM Report. Fannie Mae and Freddie Mac completed 8,464 foreclosure prevention actions in August, bringing the total to 4,372,944 since the start of the conservatorships in September 2008.

Additionally, the GSE's serious delinquency rate remained unchanged at 0.65% at the end of August from July. Total refinance volume increased in August 2019 as mortgage rates fell in previous months. Mortgage rates decreased in August: the average interest rate on 30‐year fixed rate mortgage fell to 3.62% from 3.77% in July.

Freddie Mac [2] recently announced that its Single-Family Credit Risk Transfer (CRT) [3] programs have surpassed the $50 billion mark in transferring credit risk to private investors and (re)insurers. From program inception to date, the company has transferred a portion of the credit risk on more than $1.3 trillion of Single-Family mortgages based on unpaid principle balance (UPB) at issuance.

Per FHFA guidelines, Freddie Mac now transfers the credit risk on more than 90% of the UPB on CRT-eligible, newly-acquired Single-Family mortgages.

The goal of Freddie Mac’s Single-Family CRT programs is to transfer credit risk away from U.S. taxpayers to global private capital via securities and (re)insurance policies. Earlier this year, Freddie Mac reported a slight increase in comprehensive income in Q2 2019 from the previous quarter, up to $1.8 billion.

Since the start of the CRT programs in 2013 through the end of June 2018, Fannie and Freddie have transferred a portion of credit risk on approximately $3.1 trillion of UPB with a combined RIF of about $102 billion, or 3.3% of UPB.