Fannie Mae on Thursday priced the transfer of $659 million of credit risk through a real estate mortgage investment conduit structure, the fifth transaction of its kind the company has brought to market this year.
Since its first CAS deal in 2013, the government-backed company has issued $68 billion in bonds and shared some of the credit risk on about $2.3 trillion in single-family loans with private investors, but the presidential election has raised questions about the scope of its future activities.
The vote this fall will pit former President Trump against current President Biden, whose administrations handled capital requirements for structured credit risk transfers differently.
The GSE capital framework, developed under Mark Calabria, who served as head of the Federal Housing Finance Agency during the Trump administration, increased the risk-weighting of credit risk transfers.
This, along with the pandemic-related market turmoil, led Fannie to temporarily withdraw from its CRT operations.
Rates then began to rise again after Sandra Thompson, who led the Federal Housing Finance Agency under Biden, began loosening capital rules for CRTs.
It is unclear whether Calabria would be asked to return to the Trump administration for a second term, or whether she would take the same position at FHFA if asked. Calabria has said she would consider serving Trump again if asked.
Some political analysts have speculated that Calabria may be interested in a different position, but the FHFA post could be filled by someone similar to him: Jonathan McKernan, who served as director of the Federal Deposit Insurance Corp., has been mentioned as a possible candidate.
McKernan, who did not respond to requests for comment on the political analysts' speculation, has made references and comparisons to the FHFA's 2020 Capital Framework when talking about the evolution of bank capital regulations.
Other participants in the CRT market besides Fannie include Freddie Mac, a smaller but still important rival in the influential government-related mortgage market that has been a more consistent participant while Fannie has been idle. Banks and other private players also trade.
Reports of increased banking activity have circulated this year, but debate continues over the regulatory treatment of risk transfer in this market.
Connecticut Avenue Securities' deal this week, CAS Series 2024-R05, is designed to allow the government-sponsored company to share some of the credit risk from a reference pool of single-family loans with an outstanding principal balance of about $21.5 billion.