Page 56 - July-August 2018 GSE Report Flip Book

FANNIE MAE
JJUALN. U- ARUYG. 22001188
enhancement. EPMI also serves as another innovation for transferring credit risk from Fannie Mae to the private market, while diversifying the providers of the credit protection for its single-family book of business.EPMI will allow lenders to sell Fannie Mae mortgages with loan to value ratios above 80%. In exchange, Fannie will receive an additional loan-level price adjustment fee from the lender.
In the announcement of the EPMI pilot, Fannie Mae stated:
We are initially securing coverage pursuant to the reinsurance structure, testing lender and reinsurance counterparties’ receptions to the offering.
Over time, additional EPMI participants may include traditional mortgage insurers. Fannie Mae’s choice of the EPMI insurance provider will not affect the experience or requirements of participating EPMI lenders, and lenders will generally not know which insurers will be writing coverage to Fannie Mae.
Like our CIRT execution, the EPMI reinsurance framework utilizes a licensed, dedicated insurance-writing entity that transfers 100% of its risk to a panel of reinsurers. Each participating reinsurer undergoes a thorough counterparty review in order to be approved by Fannie Mae, and the coverage allocation
to each reinsurer for every EPMI transaction is determined by Fannie Mae. This initial roll-out is subject to a volume limit and participating lenders may deliver loans to us on or after August 1, 2018. This pilot will be evaluated and approved by the Federal Housing Finance Agency prior to any changes beyond the pilot phase. (Press Release, Fannie Mae, 07/10/18)
Fannie Mae pioneers the market’s first-ever Secured Overnight Financing Rate (SOFR) Securities
On July 26, Fannie Mae issued the market’s first ever Secured Overnight Financing Rate (SOFR) securities. The three-tranche $6 billion SOFR debt transaction settled July 30, 2018.
Fannie’s floating rate notes, offered in three maturities, were met with strong investor demand from a broad and diverse investor base.
Maturities Amount
6-month $2.5B 12-month $2.0B 18-month $1.5B
Pricing
SOFR + 8 bps SOFR + 12 bps SOFR + 16 bps
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