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 (CRT) transactions through the second quarter of 2018. 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 both the single-family and multifamily markets. For the first time, FHFA is reporting the percentage of the Enterprises' targeted single-family and multifamily acquisitions that are covered by credit risk transfer, as well as the amount of credit risk that has actually been transferred.
Since the CRT programs began in 2013, through the end of June 2018, the Enterprises have transferred a portion of credit risk on approximately $2.5 trillion of unpaid principal balance (UPB) with a combined Risk in Force (RIF) of about $81 billion. Additionally, $1.1 trillion of UPB credit risk has been transferred to primary mortgage insurers in the same period.
The Progress Report shows that, in the first half of 2018:
- The Enterprises transferred risk on approximately $367 billon of UPB with a total RIF of $12 billion. Debt issuances, like Structured Agency Credit Risk (STACR) and Connecticut Avenue Securities (CAS), accounted for 61 percent of RIF;
- Fannie Mae transferred risk on $179 billion of UPB, with a total RIF of $5.9 billion; and
- Freddie Mac transferred risk on $188 billion of UPB with a total RIF of $6.2 billion.
“As evidenced in this report, through CRT and mortgage insurance, the majority of underlying credit risk on mortgages targeted for CRT has been transferred to private investors," said FHFA Director Melvin L. Watt. “The amount of credit risk transferred should continue to increase as the Enterprises continue to innovate and experiment with different structures and attempt to expand the scope of their CRT programs to further reduce risk where economically sensible."
Contacts:
Media: Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030
Consumers: Consumer Communications or (202) 649-3811