In an effort to reduce the risk of taxpayers and increase private capital in the mortgage market, Fannie Mae will settle a credit risk sharing transaction under its Connecticut Avenue Securities program on December 8. Designated CAS Series 2016-C07, the transaction is worth $701.7 million in notes.
Since the CAS program’s inception in 2013, Fannie Mae has closed 16 deals valued at $19.8 billion in notes. The credit risk on approximately $834 billion in single-family mortgages has been transferred from the GSE to private investors in that time period.
The December 8 transaction marks the seventh for the CAS program this year, and is comprised of more than 96,000 single-family mortgage loans, totaling an approximated $22.5 billion in outstanding, unpaid balances. Loan-to-value ratios on these loans, which were acquired January through April of this year, fall between 80 and 97 percent. For the most part, they are fixed-rate, fully amortized, 30-year loans.
“We are pleased to successfully bring our seventh and final transaction of the year to market,” said Laurel Davis, VP of Credit Risk Transfer, Fannie Mae. “Throughout 2016, we continued to drive innovation in credit risk management, increase transparency of our data and tools, and deliver consistent CAS offerings that were met with robust and growing investor demand. We look forward to continued CAS transactions in 2017 and we expect to be in the market within our next scheduled issuance window in January, subject to market conditions.”
The CAS program is not Fannie Mae’s only offering aimed at lowering taxpayer risk in the mortgage market. The GSE also offers a reinsurance program called Credit Insurance Risk Transfer, or CIRT.
For information on this CAS deal, as well as others in the works, Fannie Mae recently launched the new Data Dynamics tool, which allows users to analyze ongoing CAS transactions as well as historical loan data from the GSE. Interested parties can also view the schedule of upcoming 2017 CAS deals on the Fannie Mae website.