Market Update: Proposed enhancement to Fannie Mae’s Connecticut Avenue Securities (CAS) Program and corresponding update to our Mortgage Backed Securities (MBS) Prospectus

June 7, 2017


On May 8, 2017, Fannie Mae announced a proposal to enhance its Connecticut Avenue Securities(CAS) credit risk transfer program by structuring future CAS offerings as notes issued by trusts that qualify as Real Estate Mortgage Investment Conduits (REMICs). This proposed enhancement to our CAS program is designed to promote the continued growth of the market by expanding the potential investor base for these securities, making the program more attractive to Real Estate Investment Trust (REIT) investors, as well as certain other investors, and limiting investor exposure to Fannie Mae counterparty risk.

Fannie Mae would facilitate this change by making a REMIC tax election on a majority of single-family loans that we acquire and guarantee. A primary guiding principle of our CAS program is to ensure that we avoid any disruption of the To-Be-Announced (TBA) Mortgage Backed Security (MBS) market. The May 8th announcement was published in order to solicit market feedback on the proposal to validate our assessment that the change would not negatively impact the MBS market.

Since the release of our initial announcement, Fannie Mae has been conducting outreach efforts with a variety of industry stakeholders to solicit feedback on the proposal. Feedback has been generally favorable, with respect to the potential future changes to the CAS program, as well as the lack of impact to the MBS market. No significant concerns regarding the MBS market have been raised to date. The Fact Sheet and FAQs (available below) provide updated information in response to market feedback that we received. 

We are continuing to reach out to market participants with the objective of concluding the process of gathering feedback in the next several weeks. Market participants may contact the Fannie Mae Investor Help Line at 1-800-2FANNIE, Option 2, or by e-mail with any questions or to provide feedback on the proposal.

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