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Looking Back on 10 Years of CRT

Ten years ago, Fannie Mae launched a new program known as CRT, or Credit Risk Transfer, which offloads risky loans to investors which in turn helps taxpayers and helps the GSE provide opportunities for investors and reinsurers to invest in U.S. housing, and ultimately helps to build a stronger and more durable housing finance system. 

In total, 125 CRT transactions have taken place through its two primary CRT programs: Connecticut Avenue Securities (CAS) and Credit Insurance Risk Transfer (CIRT). Between these two programs, Fannie Mae has offloaded $88 billion of risky mortgages on $2.9 trillion of unpaid principal balances at issuance as of the end of September. 

Fannie Mae maintains $3.6 trillion of single-family guaranty book of business as of the end of June 2023 and remains one of the largest credit risk managers in the mortgage industry. 

“Over the years, we've developed robust policies, underwriting and servicing applications for our lender partners, and analytics for managing that credit risk so that we can continue to serve our housing mission,” Fannie Mae said. “Not only are these tools important for our borrower, renter, and lender stakeholders, but they're also critical to our investors." 

The program began in 2013 when Fannie Mae sought to share mortgage credit risk with investors and reinsurers, which facilitated the flow of private capital between the GSE’s lender customers and a diverse swath of private market participants. The initial goal was to build the market and expand liquidity, while protecting taxpayers, during a time when the GSEs were not permitted to retain earnings. 

The success of this program to date, as evidenced by the broad interest from investors and reinsurers, reinforces our confidence in CRT as an important tool for our company, even now as Fannie Mae is able to retain earnings to restore capital. 

"The valuable partnership we’ve built with an array of investors and reinsurers has been integral to building a broad and liquid market,” said Devang Doshi the SVP of Single-Family Capital Markets for Fannie Mae. “We're grateful for our deep and diverse CRT community who regularly engages with us to strengthen the programs, which is critical in shaping our strategy and delivering on our mission." 

By the numbers: 

  • Brought over 125 CAS and CIRT transactions to market. 
  • Developed a deep and diverse investor base with participation from over 265 investors and 50 reinsurers.    
  • Transferred over $88 billion of credit risk on over $2.9 trillion of unpaid principal balance (UPB) at issuance as of September 30. 
  • Repurchased $7.9 billion original principal amount of CAS debt across five tender offers. 
  • Exercised our early termination option to cancel 36 CIRT transactions prior to their scheduled maturity dates. 
  • Published a historical research dataset of over 54 million loans. 

“We remain committed to CRT and look forward to the continued partnership ahead,” Fannie Mae concluded. 

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About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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