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

May 8, 2017


Fannie Mae continues to explore ways to innovate and improve its credit risk transfer programs, including its benchmark Connecticut Avenue Securities (CAS) credit risk transfer program. As part of continued innovation, Fannie Mae has led the development of a potential new structure to expand the overall Agency credit risk transfer market. 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.

The enhancement would enable Fannie Mae to structure future CAS offerings as notes issued by trusts that qualify as Real Estate Mortgage Investment Conduits (REMICs). 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. We believe that the proposed change is consistent with that principle and are publishing this announcement in order to validate that assessment prior to implementing such change.

The accompanying Fact Sheet and Frequently Asked Questions (FAQs) provide additional detail regarding the proposed change. Following the release of this announcement, Fannie Mae will begin conducting meetings with industry stakeholders to solicit feedback on the proposal. Assuming that market feedback is generally favorable, we will announce an update to our Single-Family MBS Prospectus in order to reflect this change on a go-forward basis.

Market participants may contact the Fannie Mae Investor Help Line at 1-800-2FANNIE, Option 2, or by email with any questions or to provide feedback on the proposal.