Fannie Mae announced on Monday that it has executed two new Credit Insurance Risk Transfer (CIRT) deals: CIRT 2023-2 and CIRT 2023-3. The deals, which include over $31 billion in single-family mortgage loans, are designed to reduce risk to taxpayers by increasing the role of private capital in the mortgage market.
These are the second and third CIRT deals of 2023. The latest package includes approximately 98,000 single-family mortgage loans — 44,000 loans in CIRT 2023-2 and 54,000 in CIRT 2023-3 — with a combined outstanding unpaid principal balance of approximately $31.8 billion.
The deals will transfer a combined $926 million of mortgage credit risk to private insurers and reinsurers. In addition, Fannie Mae has acquired approximately $23.5 billion of insurance coverage on $793 billion in single-family loans through the CIRT program when measured at the time of issuance for both bulk (post-acquisition) and front-end transactions.
“We appreciate our continued partnership with the 20 insurers and reinsurers that have committed to write coverage for these deals,” Rob Schaefer, Fannie Mae vice president of capital markets, said in a statement.
The covered loan pool for CIRT 2023-2 was acquired between February and March of 2022, while CIRT 2023-3 was acquired between January and March of last year. The loans in the pool are primarily fixed-rate, 30-year term, fully amortizing mortgages. These loans were underwritten “using rigorous credit standards and enhanced risk controls,” Fannie Mae said.
The mortgages in the CIRT 2023-2 covered loan pool have loan-to-value (LTV) ratios that range from 60.01% to 80%, while the CIRT 2023-3 LTVs range from 80.01%-97%. Both deals became effective as of February 1, 2023.
Fannie Mae will retain risk for the first 95 basis points of loss on the $13.8 billion covered loan pool in CIRT 2023-2 and the first 100 basis points on the $18 billion covered loan pool in CIRT 2023-3.
If the transactions’ retention layers are exhausted, a collection of reinsurers will cover the next several hundred basis points of loss on each pool — up to $503.5 million on CIRT 2023-2 and up to $422.5 million on CIRT 2023-3.
Last year, Fannie Mae executed 11 total CIRT transactions. The ninth deal in 2022 was valued at $21 billion.
“The record amount of coverage that Fannie Mae acquired through CIRT this year further demonstrated the resiliency of this credit risk transfer vehicle,” Schaefer said at the time. “The eleven transactions covered $213 billion of single-family loans and secured $7.2 billion of coverage, which was more than 2.7 times the previous single-family CIRT record for coverage acquired in any single year.”
Fannie Mae has acquired nearly $23.5 billion in insurance coverage on $793 billion in single-family loans since the start of the CIRT program in 2013, according to Fannie Mae’s recent deal announcement.