Fannie Mae completes $8.7bn credit risk transfer deal

Fannie Mae, the US government-backed financial institution that provides liquidity to the US mortgage markets by buying mortgages from lenders, has completed a new credit insurance risk transfer deal, covering a pool of approximately $8.7 billion of multifamily loans.

The new transaction marks the first multi-tranche Multifamily Credit Insurance Risk Transfer (MCIRT) undertaken by Fannie Mae in 2020 and the eight overall.

Fannie Mae's MCIRT programme shares risk with diversified reinsurer and insurer counterparties. It supplements the company's Delegated Underwriting and Servicing (DUS) programme where originating lenders routinely share approximately one-third of the credit risk on multifamily loans.

The covered loan pool for the transaction consists of 1,017 loans acquired by Fannie Mae from July 2019 through September 2019. These loans are secured by 1,019 properties. Each loan has an unpaid principal balance of less than $30 million.

"Fannie Mae's first multifamily credit risk sharing transaction of the year transferred approximately $283 million of risk to reinsurers and insurers," said Jonathan Gross, vice president, multifamily, Fannie Mae. "With this Multifamily CIRT transaction, we are commencing regular programmatic issuance and we expect to be in the market with one transaction in each quarter."