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Investments / The Ticker

Fannie Mae completes risk-sharing transaction

GSE provides more than $5B in mortgage insurance coverage

dollar zoomed in

Fannie Mae completed its first risk-sharing transaction Thursday, providing mortgage insurance coverage on a pool of more than $5 billion single-family mortgages. 

This transaction supports the Federal Housing Finance Agency's strategic plan for the enterprise conservatorships by transferring credit risk to the private sector and reducing Fannie Mae's footprint in the mortgage market, explained FHFA acting director Ed DeMarco.

"This transaction also gives further insight into how the private sector prices mortgage credit risk, further reduces taxpayer exposure to that risk and demonstrates an approach to risk-sharing," he said. 

In September, the enterprise announced its plan to issue a transaction similar to its sister agency Freddie Mac as the Structured Agency Credit Risk (STACR) bond.

Fitch Ratings said it intends to measure the inaugural risk transfer transaction from Fannie Mae, called Connecticut Avenue Securities Series 2013-C01.

The mezzanine tranche, which incorporates the private market portion of the $28 billion dollar reference pool, is comprised of 117,745 recent vintage Fannie Mae mortgages.

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