Washington, D.C. – The Federal Housing Finance Agency (FHFA) today issued a Credit Risk Transfer Progress Report describing the status and volume of credit risk transfer transactions through the second quarter of 2017. The Report provides a comprehensive picture of how Fannie Mae and Freddie Mac (the Enterprises) transfer a substantial portion of credit risk to the private sector through a variety of transactions in the single-family market.
The Report demonstrates that the majority of the underlying mortgage credit risk on mortgages targeted for credit risk transfer (CRT) has been transferred to private investors through CRT and mortgage insurance. The Progress Report shows that:
The Enterprises have transferred a portion of risk on $1.8 trillion of unpaid principal balance (UPB) from the start of the CRT programs in 2013 through the second quarter of 2017, with a combined Risk in Force (RIF) of about $60.6 billion;
In the second quarter, the Enterprises transferred risk on $213 billon of UPB with a total RIF of $6.4 billion;
Debt issuances, like Structured Agency Credit Risk (STACR) and Connecticut Avenue Securities (CAS), accounted for 70 percent of RIF, and insurance and reinsurance transactions accounted for 25 percent;
Front-end reinsurance transactions increased from 2 percent of RIF in the first quarter of 2017 to 4 percent in the second quarter; and
In the first half of 2017, loans targeted for credit risk transfers represented 62 percent of the Enterprises’ single-family loan production.
“This report shows that the Enterprises have made tremendous progress with credit risk transfer in a short period of time, as they continue to leverage a receptive private sector market and reduce risk for taxpayers,” said FHFA Director Melvin L. Watt.
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