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Volume 14 - Number 25

December 12, 2014

Fannie Adds New Twist to Risk-Transfer Transactions

Fannie Mae purchased reinsurance from three un-named U.S. providers for a new “credit insurance risk transfer” transaction. CIRT 2014-1 represents a new twist on the GSE’s risk-transfer program, which has focused until now on Connecticut Avenue Securities. Fannie will retain 50 basis points of first-loss risk on a pool of $6.42 billion of loans sold to the GSE during the first quarter of 2014. If that exposure is exhausted, the reinsurance firms will absorb the next 300 bps of loss on the pool, up to a maximum of about $193 million. The term of the deal is 10 years, although the aggregate coverage amount may be lowered at several points depending on delinquencies and paydown. ...

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This biweekly covers the housing-related government-sponsored enterprises with experienced, expert analysis.



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