Fannie, Freddie to Sell More Risk-Sharing Securities

Fannie Mae and Freddie Mac will sell large amounts of their credit risk in the U.S. residential mortgage sector. The news comes from the latest Fitch Ratings report on risk sharing.

"Risk-sharing transactions completed through the first three quarters of 2014 reference mortgage pools of close to $300 billion after totaling just over $80 billion for all of 2013," said Fitch's Managing Director Grant Bailey in a press release. "With additional transactions likely before yearend, the amount of mortgage pools referenced is on pace to approach $400 billion."

As the residential real estate market continues to rebound from 2008's bursting bubble, the government continues to share more of the risk with the private sector. Credit scores have improved significantly amongst mortgage pools, with Fitch reporting an average FICO score of 760 compared to an average score of 716 during the strong housing year of 2005.

With the market for residential mortgages, including nonperforming ones, heating up, the Federal Housing Finance Authority has begun emphasizing divestment of the massive government-sponsored enterprises from their current standing in the market. The FHFA currently serves as conservator and regulator of the GSEs — not without some consternation from GSE shareholders.