GSEs transfer $5.5B of credit risk in 1Q: FHFA

The Right Choice on Capital June 26, 2017 ~ jtimothyhoward One of the recommendations of the "Blueprint for Restoring Safety and Soundness to the GSEs" released earlier this month by the investment firm Moelis & Company is the imposition of "rigorous new risk and leverage-based capital standards" on Fannie Mae and Freddie Mac.

FF transferred $5.5B of credit risk on $174B of mortgages in their portfolios to buyers with an appetite for that. Few deny, however, that reform is badly needed to end the government’s conservatorship of Freddie Mac and Fannie Mae and to eliminate taxpayers’ risk exposure concerning the housing giants.

FHFA Continues to Push Fannie, Freddie on Credit-Risk Sharing. – The GSEs have come a long way since they first began embracing credit sharing deals. In 2014, the FHFA pushed the GSEs to issue at least $90 billion in securities with credit risk attributes. Overall, Fannie has issued $622 billion in credit risk transfer deals while Freddie has issued $589 billion in such deals since mid-2013.

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Credit Risk Transfer. the federal housing finance agency (FHFA) began its initiative to minimize the market footprint of government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.. the GSEs have transferred credit risk on original mortgage balances of $1.9 trillion and as a.

PHH CORP – 10-K – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Risk Factors" set forth above. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is. In addition, we amended our existing Credit Facility extending a portion.

Following the housing market crash, mortgage default rates increased dramatically, and the GSEs became more aggressive in terms of enforcing the reps and warrants. In some cases, lenders were required to repurchase loans from the GSEs for relatively minor breeches with little obvious impact on credit risk.

When the Federal Housing Finance Agency (FHFA) took GSEs Freddie Mac and Fannie Mae into conservatorship in September 2008, the implied government guarantee on the companies’ portfolios became an effective guarantee – meaning that U.S. taxpayers would shoulder any losses. Freddie Mac 1 June 2016 What’s the difference between risk transfer

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The objective of the transaction is to transfer credit risk from Freddie Mac to private investors with respect to a .7 billion pool of mortgage loans currently held in previously issued MBS.

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