NCUA said new bonds to be issued by Fannie Mae that will allow investors to share the risk of homeowner defaults will not be permitted by federal credit unions.
Credit unions are allowed to invest in government securities that are fully guaranteed. Risk-sharing securities are not, so they therefore would fall outside that rule, NCUA’s Office of Capital Markets and Planning told Credit Union Journal last week.
While Fannie Mae and is among the few issuers in which credit unions may invest—along with other government sponsored entities and the U.S. Treasury—NCUA said “it is the structure of the securities, not the issuer, that is determinative.”
Fannie’s planned issuance of the risk-sharing bonds follows a $500 million offering of similar securities by Freddie Mac in July.
