Connecticut Avenue Securities Investor Presentation
Private Mortgage Insurance on High LTV
Loans
All loans in CAS deals with original loan-to-value ratios greater than 80% are required to have mortgage insurance (MI) in place
provided by one of eight approved and active Mortgage Insurance Companies
Borrower-paid MI: the borrower makes a monthly payment as part of his/her mortgage payment
•
Approximately 84% (1) of MI is borrower-paid. Monthly MI payment is typically 7.0% - 7.5% (2) of the borrower's total
mortgage payment at loan inception. MI can be canceled by borrower once loan reaches 78% LTV (and can be canceled by
the borrower in other circumstances).
Lender-paid MI: the lender pays for the MI upfront and charges the borrower a higher interest rate
•
Approximately 16% (1) of MI is lender-paid. Lender-paid MI cannot be cancelled because the payment is built into the
mortgage rate.
If a loan goes to disposition, the MI company is obligated to pay Fannie Mae a claim based on the MI coverage percentage. This
payment is passed through to the CAS investor as additional disposition proceeds and reduces the loss.
LTV Range (%)
Standard MI
Coverage (%)
95.01 97.00%
35.0%
90.01 95.00%
30.0%
85.01 90.00%
25.0%
80.01 85.00%
12.0%
Example CAS Loss Calculation
$ (100,000.00)
Defaulted UPB
Delinquent Interest
Liquidation Expenses
MI Claim Amount
Net Sales Proceeds
Gross Loss
MI Proceeds
CAS Investor Net Loss
$ (5,000.00)
$ (5,000.00)
$(110,000.00)
$ 80,000.00
$ (30,000.00)
$ 27,500.00 (MI Coverage: 25%)
$ (2,500.00)
Note: most loans have "standard" coverage; however, levels may differ
on some loans - this is disclosed on the loan-level deal file
If the MI company fails to pay a claim per their contractual obligation, Fannie Mae will step in and cover the MI contractual benefit
amount on that loan. Investors are not exposed to MI Company counterparty risk.
(1) Figures represent breakdown of MI payments from CAS 2018-C04 deal
(2) Given the following key assumptions: 90% LTV, 740 FICO, MGIC Mortgage Insurance rates (44 bps for a 740 FICO loan), No Curtailment
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