Fannie Mae announced on Thursday that it has completed two of its traditiional Credit Risk Transfer (CIRT) transactions of 2017. The transactions, CIRT 2017-1 and CIRT 2017-2, cover $20.4 billion in existing loans in the company’s portfolio. Fannie Mae has acquired nearly $4 billion of insurance on a little under $160 billion of loans through CIRT programs.
“These two CIRT transactions transferred $510 million of risk and were met with a record number of participants, which included sixteen reinsurers and insurers,” said Rob Schaefer, VP for credit enhancement strategy & management at Fannie Mae. “We are pleased with the growing interest in our CIRT program and will continue to take steps to build liquidity in the risk-sharing market through the regularity and transparency of our credit risk transfer transactions.”
CIRT 2017-1 and CIRT 2017-2 both came into effect on February 1. CIRT 2017-1 will retain risk for the first 50 basis points of loss on an $18.1 billion loan pool, while CIRT 2017-2 will retain risk for 50 basis points of loss on a loan pool of $2.3 billion.
The loan pools covered consist of 30-year fixed-rate loans with loan-to-value ratios greater than 60-percent and less than or equal to 80 percent, all acquired by Fannie Mae from January 2016 through July 2016.
Coverage for these deals is provided based upon actual losses for a term of 10 years. After one year, the aggregate coverage amount may be reduced depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent. Coverage may be cancelled after five-years, or with a fee before the five-year anniversary.
Through its credit risk transfer efforts, including CIRT, Fannie Mae has transferred a portion of the credit risk on around $944.2 billion in single-family mortgages.