Fannie Mae (OTC:FNMA) Stock In Focus After Recent News
Investors who could be interested in the real estate mortgage sector may consider tracking Fannie Mae (OTC:FNMA) a bit more closely, especially after the lender made a key new announcement yesterday. On April 4, the company announced that it had been successful in completing a pair of Credit Insurance Risk Transfer (CIRT) transactions. Thanks to the two transactions, Fannie Mae transferred as much as $709 million in credit risk to private reinsurers and insurers.
The Vice President of Capital Markets at Fannie Mae, Rob Schaefer, spoke about the transactions yesterday. He thanked the 25 insurers and reinsurers for the support that they provided to provide coverage on the deals. One of the CIRTs covered a pool of loans consisting of as many as 30000 single-family mortgage loans that bore an aggregate outstanding unpaid principal balance (UPB) of around $9.9 billion. The covered loan pool collateral had loan-to-value (LTV) ratios of 60.01% to 80% and had been acquired between April 2023 and July 2023.
The covered loan pool for the second CIRT consisted of around 35,000 single-family mortgage loans with a UPB of around $12.1 billion. It was also noted that the covered loan pool also had LTV ratios in the range of 80.01% to 97%. The loans that had been included in both transactions were made up of fixed-rate mortgage loans with 30-year terms in general.
The coverage for the loans had been provided to Fannie Mae based on the actual losses for a term of 18 years in general. In the news release, it was also noted that Fannie Mae had the right to cancel the coverage on the deals at any time that it wished, after five years from the date of the transaction. It remains to be seen if the Fannie Mae stock experiences any action today.
