Fannie Mae's new headquarters

WASHINGTON, DC–Fannie Mae has just completed a transaction in which 7 reinsurers and insurers took on about $166 million of multifamily credit risk on a pool of debt that totals around $11.1 billion. The transaction, a credit insurance risk transfer, is the first time Fannie Mae widely marketed these assets to reinsurers and was pleasantly surprised to find the deal oversubscribed, according to Jonathan Gross, Vice President, Multifamily, Fannie Mae.

The GSE had done two quiet “test and learn” transactions prior to this one, which went well, Gross tells GlobeSt.com. This transaction “marks our pivot on doing this on a programmatic basis.” Fannie Mae plans to do another deal this year and, going forward in 2019, two to three deals per year.

Those initial transactions were more to help the GSE see what the structure would look like and what questions a reinsurer would have, Gross says. It learned that reinsurers prefer to avoid large loans in the policy and gravitate to loans that are covered to have $30 million UPB or less. “They want to avoid a situation where a single loan or small handful of loans would result in loss levels,” Gross says. “They are more comfortable being exposed to a broader risk, not property specific risk.”