22 different re/insurers have supported Fannie Mae’s first Credit Insurance Risk Transfer (CIRT) deal of 2023, on $11.8 billion of single-family (SF) loans
As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2023-1 transferred $407.5 million of mortgage credit risk to private insurers and reinsurers.
Since inception to date, Fannie Mae has acquired approximately $22.6 billion of insurance coverage on $761 billion of SF loans through the CIRT program, measured at the time of issuance for both post-acquisition and front-end transactions.
Fannie Mae noted that the covered loan pool for CIRT 2023-1 consists of approximately 35,000 SF mortgage loans with an outstanding unpaid principal balance of approximately $11.8 billion.
In addition, the covered pool includes collateral with loan-to-value (LTV) ratios of 60.01% to 80.00% acquired in January 2022.
Through CIRT 2023-1, which came into effect January 1, 2023, Fannie Mae will retain risk for the first 75 basis points of loss on the $11.8 billion covered loan pool. However, if the $88.6 million retention layer is exhausted, 22 reinsurers will cover the next 345 basis points of loss on the pool, up to a maximum coverage of $407.5 million.
In a press release, Fannie Mae states that coverage for this deal is provided based upon actual losses for a term of 12.5 years. However, depending on the paydown of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each month thereafter.
“CIRT 2023-1 begins another active year of CIRT issuance for Fannie Mae. We appreciate our continued partnership with the 22 insurers and reinsurers who have committed to write coverage for this deal,” said Rob Schaefer, Fannie Mae Vice President for Capital Markets.
Last year Fannie Mae executed eleven CIRT transactions. Its final transaction, CIRT 2022-11 transferred $343 million of mortgage credit risk to private insurers and reinsurers.
