Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) has priced its credit risk sharing deal under its Connecticut Avenue Securities™ program. This CAS Series ‘2016-C07’, which is a $701.7 million note offering, is intended to close on December 8, 2016.

The highlights

Through this deal and other credit risk sharing plans, Federal National is extending the role of private capital in the industry of mortgage and minimizing taxpayer risk. After this deal is closed, the company will have acquired 16 CAS contracts to market since the plan commenced, issued notes worth $19.8 billion, and transferred a part of the credit risk to private shareholders on single-family mortgage finances with an initial unpaid principal balance of nearly $677 billion.

Since 2013, the company has transferred a part of the credit risk on almost $834 billion in single-family mortgages via its risk transfer plans. Laurel Davis, the VP of Credit Risk Transfer at Federal National, said that they are delighted to successfully launch their seventh and final deal of the year to market.

Throughout FY2016, they continued to lead innovation in credit risk management, enhance transparency of their tools and data, and offer consistent CAS offerings that witnessed growing and robust investor demand. They look forward to sustained CAS deals in 2017 and they project to be in the industry within their next planned issuance window in January, depending on market conditions.

CAS Series 2016-C07 reference pool comprises of over 96,000 single-family mortgage credits with a due unpaid principal balance of nearly $22.5 billion. The mortgages in this reference section have loan-to-value ratios ranging from 80% to 97% and were bought from January through April this year. Reference pool finances in this deal were bought with mortgage insurance meeting Federal National requirements. As per the update, the credits comprised in this deal are fixed-rate, usually 30-year term, fully amortizing credits and were underwritten utilizing enhanced risk controls and strong credit standards.

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