Fannie Mae Shares Credit Risk with National Mortgage Insurance Corporation
Callie Dosberg 202-752-3117
WASHINGTON, DC – Fannie Mae (FNMA/OTC) has finalized an agreement with National Mortgage Insurance Corporation ("National MI") on a transaction to provide credit risk coverage on over $5 billion in single family mortgages. The coverage furthers the 2013 Conservatorship Scorecard goal of transferring risk to private sources of capital. The insurance became effective as of September 1, 2013.
"This insurance policy transfers credit risk away from taxpayers, which is an important element of creating a more sustainable housing finance system," said Andrew Bon Salle, executive vice president for underwriting, pricing and capital markets at Fannie Mae. "We will continue working with FHFA to meet the goals of the Conservatorship Scorecard for 2013 to reduce risk for Fannie Mae and taxpayers."
The National MI policy covers certain loans acquired by Fannie Mae in the fourth quarter of 2012, each of which had an original loan-to-value ratio (LTV) between 70 percent and 80 percent. The terms of the policy result in Fannie Mae’s exposure on these loans being reduced to approximately 50 percent LTV, subject to a deductible amount and aggregate loss limits.
Among other provisions, the Conservatorship Scorecard for 2013 asks Fannie Mae to transfer credit risk on at least $30 billion of single-family loans that the company owns. Additional transactions are expected this year in order to meet the goals of the Scorecard.
National Mortgage Insurance Approved as Mortgage Insurer
Today we are announcing that we have approved National Mortgage Insurance (National MI) as a mortgage insurer eligible to insure mortgages sold to Freddie Mac. National MI’s entry into the market will provide our lenders with more options when selecting a mortgage insurance provider for qualified borrowers who have down payments of less than 20 percent.
Effective April 1, 2013, Sellers can deliver mortgages insured by National MI through the selling system using Uniform Loan Delivery Dataset (ULDD) Data Point MI Company Name Type "NMI." Freddie Mac’s Single-Family Seller/Servicer Guide Exhibit 10 [PDF] has been updated to include National MI as a Freddie Mac-approved mortgage insurer.
If you are interested in becoming a master policyholder with National MI, please visit National MI’s web site or call (855) 317-4664 for more information.
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