Fannie Mae releases final credit insurance risk transfer for 2023

Fannie Mae Announces Ninth and Final Credit Insurance Risk Transfer for 2023, Finalizing with Lower Volumes and Amounts Unpaid balance in coverage pool compared to last year.

The latest transaction, CIRT 2023-9, transfers credit risk worth $270.7 million to 21 insurers in the private market. The loan pool includes approximately 34,000 single-family mortgages with unpaid principal balances of nearly $11.5 billion that were obtained between October and December 2022. Loan-to-value ratios within the pool range from 80% to 97%.

Fannie Mae will bear up to 165 basis points of loss risk in the pool, up to a $190 million retention layer. 21 reinsurers will cover the next 235 basis points, up to $270.7 million.

Coverage is provided based on actual losses and has a term of 12.5 years. The amount of coverage may be reduced on the first anniversary of the transaction and each month thereafter, depending on the extent of repayment or severe delinquency on the CIRT 2023-9 loan. The GSE may also terminate coverage after five years after payment of cancellation fees.

This year, Fannie Mae Across nine transactions, $3.66 billion in risk was transferred from $121 billion in single-family loans, two fewer than the amount originated in 2022. The value of unpaid balances tied to this year’s deals is also more than 77% lower than the $535 billion in 2022.

Devang Doshi, senior vice president of capital markets at Fannie Mae, said: “As the market continues to adapt to changing macroeconomic conditions, the participation of our reinsurance partners played an important role in closing out another successful year. “

To date, Fannie Mae has purchased approximately $25.9 billion in insurance on $870.2 billion worth of loans through the CIRT program. As of the end of the third quarter, Fannie Mae’s books included a reference pool of $1.27 trillion in outstanding principal balance credit risk transfer transactions on single-family loans.

Loan performance remains strong despite expiration of pandemic relief measures signs of distress caused some concern.At a recent meeting, the Mortgage Bankers Association said it expected Delinquency rates will increase in coming monthsRecent economic reports show that the U.S. Family encounters financial difficulties To a degree not seen in many years.

In another deal this week, Fannie Mae also made its first multifamily Connecticut Avenue securities credit risk transfer of 2023 this week, ranking third with a $595 million note issuance. MCAS Series 2023-01 includes 432 multifamily loans with an unpaid principal balance of approximately $24 billion. The loan was obtained between January 2021 and December 2022.

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