Credit risk transfers

While using the 30-day SOFR as its index, Freddie Mac structured the deal so it could shift to a one-month term if and when that rate is approved.

The GSEs began sharing their risk with the private market in new ways during conservatorship, and the Federal Housing Finance Agency’s proposed capital framework currently discourages the use of those strategies. Industry leaders voiced concerns in a FHFA listening session this week.

Following its deadline for written comments on the topic last month, the Federal Housing Finance Agency is scheduling events that will focus on two key themes emerging in responses.

Arch's second CRT transaction this year to obtain indemnity reinsurance for mortgage-insurance premiums comes at a time it is also experiencing rising 60-plus-day delinquencies on its outstanding securitized pools.

There were questions about the GSEs' use of structured credit risk transfers in the single-family market given an earlier pandemic-related market disruption.

The government-sponsored enterprise's earnings were up tenfold as it stabilized mortgage market liquidity amid the coronavirus.

A bond market once thought to be key to the futures of Fannie Mae and Freddie Mac — and the roughly $5 trillion of home loans they backstop — could instead find itself on the scrap heap due to their own regulator.

The FHFA looks to shed light on the amount of funds Fannie and Freddie will need to hold for their risk-sharing deals.

Not only is FHFA Director Mark Calabria preparing the GSEs to raise capital, but he must also help them decide just what they are selling to private investors in the way of equity returns and risk.

Fannie Mae's profitability suffered but it managed to stabilize the mortgage market in the first quarter even with the coronavirus disrupting, among other things, certain credit-risk transfer vehicles it has used.