Freddie Mac believes the market for credit-risk transfers may never return to pre-COVID levels because of the potential impact of the pandemic on mortgage performance.

It’s becoming increasingly clear that unless Fannie or Freddie comes to the rescue of investors, certain pre-2015 CRT deals will sustain losses as millions of borrowers accept mortgage forbearance plans.

One mortgage REIT is already feeling the effects of the GSEs’ move to unwind an obscure credit-risk transfer program by yearend.

The new products will allow Fannie to shed some of its credit risk and also reduce the amount of capital it has to hold against these loans.

Over the past six weeks, Freddie has issued eight multifamily offerings totaling $6.1 billion, and Fannie more than $10 billion.

Freddie promotes Donna Corley as EVP of single-family business.

The hiatus in the net worth sweep added $12.53 billion to the GSEs’ combined net worth over the last six months of 2019, including fourth-quarter profit of $4.27 billion at Fannie and $2.45 billion at Freddie. (Includes data chart.)

Democratic senators ask Fannie and Freddie if they have attempted to model the risks associated with climate-related disasters, including floods, wildfires and extreme weather events.

Industry advocates point out that, unlike other forms of credit-risk transfer, private mortgage insurance stands in front of all other losses.

The GSEs’ loan performance data excludes various loan types, such as ARMs and low-documentation loans, that performed poorly in the financial crisis. Nearly half of the GSE loans originated in 2006 and 2007 are expurgated from the data provided to CRT investors.