Fannie Mae [1] announced the execution of its fifth Credit Insurance Risk Transfer [2] (CIRT) transaction of 2022 in the amount of $21 billion.
Effective April 1, Fannie Mae will retain risk for the first 65 basis points of loss on the $21 billion covered loan pool. If the $136.2 million retention layer is exhausted, 22 insurers and reinsurers will cover the next 350 basis points of loss on the pool, up to a maximum coverage of $733.3 million.
"We appreciate our continued partnership with the 22 insurers and reinsurers that have committed to write coverage for this deal," said Rob Schaefer, [3] Fannie Mae VP for Capital Markets.
As part of Fannie Mae's ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2022-5 transferred $733.3 million of mortgage credit risk to private insurers and reinsurers.
CIRT 2022-5 consists of about 67,700 single-family mortgage loans with an outstanding unpaid principal balance of approximately $21 billion. The covered pool includes collateral with loan-to-value ratios of 80.01% to 97.00% acquired between October 2021 and December 2021. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using “rigorous” credit standards and risk controls.
As of March 31, 2022, approximately $906 billion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction.
To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages.
For more information on individual CIRT transactions, click here [4].