Newsroom

The Wall Street Journal reported that in the effort to shift risk from taxpayers to the private sector, government-sponsored agencies Fannie Mae and Freddie Mac are creating a new asset class of securities.

The securities issued by Fannie are called Connecticut Avenue Securities (CAS) and Freddie's securities are called Structured Agency Credit Risk (STACR). The Journal noted they are "essentially bonds whose performance is tied to that of a pool of mortgages."

"If the mortgages default, investors in the bonds could lose some or all of their principal," the paper continued. The Federal Housing Finance Agency reportedly plans to ramp up sales of the new securities in 2016. The paper said the GSEs have sold $25 billion in securities to private investors since 2013.

Among the FHFA's goals for the GSEs in 2016 is to reduce taxpayer risk through increasing the role of private capital in the mortgage market. The FHFA put out its 2016 Scorecard for the GSEs earlier this month.

The agency also plans to build a new single-family securitization infrastructure to be used by the GSEs and other participants in the future secondary market. NAFCU continues to advocate for housing reform that guarantees access for credit unions to the secondary mortgage market, and fair prices based on loan quality rather than volume.