Feb 24 Fannie Mae said on Friday it
secured commitments for a second transaction under which the
U.S. mortgage finance agency will transfer some credit risk to
reinsurers on $15 billion worth of single-family home loans it
plans to buy from lenders.
This type of security is aimed at reducing Fannie Mae's
exposure to defaults, which soared during the housing bust about
a decade ago.
Coverage and pricing for the risk transfer deal are
committed for 12 months for loans it acquires in the first
quarter, Fannie said.
The Washington-based company said it will retain risk for
the first 50 basis points of loss on the pool of loans tied to
If this $75 million "retention layer," or cushion for loan
losses, is exhausted, the participating mortgage insurance
companies will cover the next 250 basis points of loss on the
pool, up to a maximum coverage of approximately $375 million, it
Fannie added that it will continue to offer credit risk
transfer deals that cover existing mortgages on its portfolio.
The company's total book of business was $3.144 trillion at
the end of 2016.
Since 2013, it has transferred a portion of its risk on
possible defaults on more than $896 billion worth of
(Reporting By Richard Leong; Editing by Jonathan Oatis)