Credit Risk Transfer Progress Report

The credit risk transfer (CRT) programs at Fannie Mae and Freddie Mac (the Enterprises) wer​e established to reduce taxpayer exposure to risks arising from credit guarantees extended by the Enterprises through their normal courses of business. The Federal Housing Finance Agency (FHFA) initiated development of a CRT program in 2012 to reduce risk at the Enterprises during their conservatorships, and Fannie Mae and Freddie Mac began implementing their CRT programs in 2013. Under FHFA’s oversight through guidelines, instructions, strategic plans, and Scorecard objectives, the programs have since become a core part of the Enterprises’ single-family guarantee businesses, similar to how risk sharing with the private sector is an integral part of the Enterprises’ multifamily businesses. Using a range of different transaction structures, the Enterprises have transferred to private investors a substantial amount of credit risk assumed through the acquisition of single-family loans in targeted loan categories. The programs include or have included CRTs via capital markets issuances (both corporate debt and bankruptcy remote trust structures), insurance/reinsurance transactions, senior/subordinate transactions, and a variety of lender collateralized recourse transactions. The Enterprises continue to evaluate the scope of their CRT programs and innovate within the CRT market by employing different structures as part of their efforts to further reduce risk, all while using transactions that are economically sensible.​

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