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28 March 2019Insurance

Fannie Mae completes $11.7bn multifamily mortgage risk transaction

Fannie Mae, the US government-backed financial institution that provides liquidity to the US mortgage markets by buying mortgages from lenders, has completed a multi-tranche credit insurance risk transfer (CIRT) transaction that covers a pool of $11.7 billion of multifamily loans.

The new transaction, MCIRT 2019-01, is the fifth CIRT transaction as part of Fannie Mae’s effort to increase the role of private capital in the multifamily mortgage market and mitigate risk for US taxpayers.

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

“We are happy to introduce our first multifamily credit risk sharing transaction of 2019. Further innovation and reinsurer interest allowed us to bring to market our first three-tranche offering,” said Jonathan Gross, vice president, multifamily, Fannie Mae.

Gross added: “This new transaction transferred $332 million of risk to reinsurers and insurers, making it the largest single transfer of risk for our multifamily CIRT program. Depending on market conditions, we plan to return later this year with additional multifamily CIRT transactions.”

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More on this story

Insurance
12 July 2019   Fannie Mae, the US government-backed financial institution that provides liquidity to the US mortgage markets by buying mortgages from lenders, has completed two new front-end credit insurance risk transfer (CIRT) deals.
Insurance
24 April 2018   Arch Capital Group unit Arch Credit Risk Services entered into a multi-year agreement with Munich Re to provide mortgage credit assessment and underwriting advisory services related to Munich Re’s involvement in credit risk transfer programmes offered by Fannie Mae and Freddie Mac.
Alternative Risk Transfer
21 November 2016   Fannie Mae, the US government-backed financial institution that provides liquidity to the US mortgage markets by buying mortgages from lenders, has transferred another chunk of risk to the reinsurance markets – this time with different parameters to previous deals offering reinsurers diversification.