With Fannie’s first risk-share deal now deemed a success by FHFA and the GSE, it’s onward, but downward – that is, both GSEs will try more risk-shares next year, with each hoping the market will permit them to go deeper into the credit-risk tranches and, thus, share a lot more risk than either GSE could transfer in the transactions to date. With the books of business backing the current risk transfers so clean and the pricing so generous for the riskier tranches, these deals are encouraging for future risk-shares and even Corker-Warner style structures, but they also make clear that none of them will be easy, especially given all of the new rules kicking in as these risk-shares surface.

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