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The $22.5 billion Structured Agency Credit Risk transaction serves its purpose, but shows how much more work and thinking needs to be done to redesign the housing finance system.
August 5
Wells Fargo was the largest seller of loans in pools where Fannie Mae and Freddie Mac offloaded risk through
Wells' loans make up about 20% of the pools in the government-sponsored enterprises' risk-sharing deals issued through March of this year. This tracks closely to the bank's origination
Unlike standard securitizations, the credit-linked transactions do not transfer ownership of the loans. Rather, they transfer some of the risk from GSE guarantees on preexisting mortgage securitizations.
The transactions were among the "scorecard" goals Fannie and Freddie's regulator and conservator set last year as part of an effort to shift more risk back to the private sector.
The former acting director of Fannie Mae and Freddie Mac's regulator, Ed DeMarco, set the scorecard goals in 2013.
There has been no scorecard set for 2014 since former congressman Mel Watt took charge of the Federal Housing Finance Agency, but the GSEs have continued so far to regularly issue risk-sharing transactions.
Delinquencies on the credit-linked deals have been in the 20 basis point range, according to Fitch. Six deals have come out from their inception last year through April.
Reference pool credit scores have ranged on average from 763 to 765, and the pools have an original combined loan-to-value ratio of 76%.
