FHFA Announces GSE Credit Risk Transfer Update

Jul 26, 2017

Fannie Mae and Freddie transferred $5.5 billion of credit risk on mortgages with an unpaid principal balance (UPB) of $174 billion through capital markets, reinsurance, and front-end reinsurance transactions during the first quarter of this year, according to new data from the Federal Housing Finance Agency (FHFA).

The FHFA also reported that Fannie Mae and Freddie Mac modified the first loss structure of their debt issuances to, in general, retain the first 50 basis points of losses, mostly expected credit losses, during the course of this year. As a result, the government-sponsored enterprises (GSEs) are selling most of the credit losses between 50 to 100 basis points.

Since 2013, the GSEs have transferred more than $54 billion of credit risk on $1.6 trillion UPB.

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Phil Hall

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Jul 26, 2017

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