Fannie Mae executes credit insurance risk transfer transaction on $23.1 billion in single-family loans
WASHINGTON, April 19, 2022 /PRNewswire/ — Fannie Mae FNMA today announced that it has executed its fourth Credit Insurance Risk Transfer™ (CIRT™) operation of 2022. As part of Fannie Mae’s ongoing efforts to reduce taxpayer risk by increasing the role of private capital in the mortgage market, the CIRT 2022-4 has been transferred $844.8 million of mortgage credit risk to private insurers and reinsurers. Since its inception to date, Fannie Mae has acquired approximately $18.4 billion insurance coverage on $635.6 billion single-family loans through the CIRT program, measured at the time of origination for post-acquisition (block) and initial transactions.
“We appreciate our continued partnership with the 22 insurers and reinsurers who have committed to underwriting coverage for this agreement,” said Rob SchaeferFannie Mae Vice President of Capital Markets.
The covered loan pool for CIRT 2022-4 consists of approximately 76,600 single-family mortgages with an outstanding principal balance of approximately $23.1 billion. The hedged portfolio includes collateral with loan-to-value ratios of 60.01% to 80.00% acquired between June 2021 and August 2021. The loans included in this transaction are fixed rate mortgages, generally with a term of 30 years, fully amortizing and were underwritten under rigorous credit standards and enhanced risk controls.
With CIRT 2022-4, entered into force March 1, 2022Fannie Mae will retain risk for the first 45 basis points loss on the $23.1 billion covered loan pool. If the $104.2 million retention layer is exhausted, 22 insurers and reinsurers will cover the next 365 basis points of loss on the pool, up to a maximum coverage of $844.8 million.
The coverage of this transaction is based on actual losses for a period of 12.5 years. Depending on the repayment of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced on the one-year anniversary and monthly thereafter. Coverage under this Agreement may be canceled by Fannie Mae at any time after the fifth anniversary of the Effective Date by paying a cancellation fee.
From December 31, 2021, $750 billion of outstanding UPB loans from our conventional single-family guarantee portfolio have been integrated into a reference pool for a credit risk transfer operation.
To promote transparency and help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides robust and ongoing disclosure data, as well as access to news, resources and analysis through its risk transfer web pages. credit. This includes Fannie Mae’s innovative data dynamics® tool that allows market participants to interact with and analyze both CIRT transactions currently in the market and Fannie Mae’s historical loan dataset. For more information on individual CIRT transactions, including pricing, please visit our Credit Insurance Risk Transfer webpage.
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