Fannie Mae's CAS Deal: A $708 Million Milestone Achievement

Fannie Mae Prices $708 Million Connecticut Avenue Securities Deal

Fannie Mae has announced the pricing of its Connecticut Avenue Securities (CAS) Series 2024-R06, an impressive $708 million note offering. This transaction is noteworthy as it represents Fannie Mae's sixth and final CAS REMIC transaction of the year. The CAS initiative serves as a benchmark program designed by Fannie Mae to efficiently share credit risk associated with its single-family conventional guaranty portfolio.

Significant Issuance Under CAS Program

So far this year, Fannie Mae has successfully issued approximately $4.3 billion worth of notes through the CAS program. This initiative not only strengthens Fannie Mae's financial position but also plays a vital role in the broader housing finance landscape.

Composition of the Reference Pool

The reference pool backing CAS Series 2024-R06 includes around 50,000 single-family mortgage loans, collectively holding an outstanding unpaid principal balance of approximately $16.6 billion. These loans feature varying loan-to-value ratios, ranging between 60.01% to 80.00%, which were acquired within a specific timeframe. The loans are designed as fixed-rate, typically operating over a 30-year term, and were subjected to stringent credit assessments and enhanced risk management protocols.

Tranche Retention and Structure

For this transaction, Fannie Mae plans to retain segments of several tranches, including the 1A-1, 1M-1, 1M-2, along with initial holdings of the first-loss tranches 1B-2H and 1B-3H. This retention strategy highlights Fannie Mae's confidence in the performance and security of these securities.

Fostering Market Confidence

A lead structuring manager for this deal is BofA Securities, Inc., accompanied by Cantor Fitzgerald & Co. as the co-lead manager. Additional co-managers include well-established firms such as Morgan Stanley and Wells Fargo, all contributing to the effective distribution of these securities. With the completion of this transaction, Fannie Mae will have successfully managed 67 CAS deals, pushing their total notes issued to nearly $69 billion, thereby transferring credit risk from nearly $2.3 trillion in single-family mortgage loans to private investors.

Commitment to Transparency

To enhance transparency, Fannie Mae provides comprehensive disclosure data and access to extensive resources designed for credit investors. Through its informative credit risk transfer webpages, Fannie Mae equips investors with necessary tools, market analysis, and historic loan data. These efforts facilitate better understanding and confidence in the securities offered under the CAS program.

Explaining Connecticut Avenue Securities

CAS REMIC notes are structured within a bankruptcy-remote trust, where Fannie Mae's periodic principal payments are determined by the performance of a diversified reference pool. This meticulous structure is designed to back various CAS transactions effectively, providing essential insights for investors.

Getting to Know Fannie Mae

Fannie Mae is dedicated to facilitating equitable and sustainable access to homeownership and affordable rental housing throughout America. Their initiatives not only support the classic 30-year fixed-rate mortgage but also encourage responsible innovation, making strides toward easier and fairer homebuying experiences for everyone.

Frequently Asked Questions

What is the Connecticut Avenue Securities program?

The Connecticut Avenue Securities (CAS) program is Fannie Mae's initiative aimed at sharing credit risk related to its mortgage loans and providing stability to the housing finance market.

How much did Fannie Mae price its recent CAS deal?

Fannie Mae's recent CAS transaction was priced at $708 million, marking it as an important milestone in its risk management strategy.

What is involved in the CAS reference pool?

The reference pool consists of approximately 50,000 mortgage loans with a total unpaid principal balance of around $16.6 billion, featuring loans with varying loan-to-value ratios.

Who manages the CAS transactions?

The recent CAS deal was led by BofA Securities, Inc., with multiple co-managers including Cantor Fitzgerald, Morgan Stanley, and Wells Fargo being part of the team.

How does Fannie Mae ensure transparency?

Fannie Mae promotes transparency by providing detailed disclosure data and resources for investors, accessible through their dedicated credit risk transfer webpages.

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