The credit risk transfer programs implemented by Fannie Mae and Freddie Mac in order to transfers a portion of its credit risk on certain Single-Family loans to private capital markets investors and minimize taxpayer risk are relatively new at only two years old. But the success of programs like the Connecticut Avenue Securities Series by Fannie Mae and Structured Agency Credit Risk debt note offerings by Freddie Mac have ensured that credit risk transfer is not simply a passing trend, but the way of the future for the GSEs as they look to transfer more credit risk to private investors.
Freddie Mac has laid off a substantial portion of credit risk on more than 330 billion dollars in unpaid principal balance for single-family mortgages through the first 15 Structured Agency Credit Risk offerings and 10 Agency Credit Insurance Structure transactions in two years. Fannie Mae has issued 12 billion dollars in notes and transferred a portion of the credit risk to private investors on single-family loans with 437 billion dollars in outstanding unpaid principal balance through nine CAS transactions since the program began in October 2013.
Punctuated by substantial layoffs and a significant net loss, the third quarter of 2015 was a tough one for Ocwen Financial Corporation. In late September, toward the end of the quarter, the Atlanta-based servicer announced it was cutting about 300 jobs. On Wednesday, Ocwen reported a net loss of 66 point 8 million dollars for the third quarter in 2015 compared to a net loss of 75 point 3 million dollars for the same quarter a year earlier. The servicer also reported a 21 percent year-over-year decline in generated revenue, down to 405 million dollars.