CAS Mortgage Insurance Primer Presentation
How MI Works: Typical Loan Possible Claim
Outcomes
MI Coverage
"Percentage
Option"
Settlement
☐
MI elects to pay amount equal to Total indebtedness * MI coverage %
Indebtedness=Defaulted UPB + DQ Interest + Allowable Expenses
CAS Investor sustains net loss after MI benefit is recognized
Property Sale
Conveyance
Rescission
☐
Fannie Mae disposes of property prior to MI's settlement of the claim
MI responsible for payment equal to the lesser of the loss sustained by
Fannie Mae or the amount calculated under the Percentage Option
CAS deal could sustain a loss if amount recovered from MI is less than
loss amount because MI caps expenses and accrued interest
MI opts to acquire the property from Fannie Mae by paying amount
equal to Total Indebtedness (subject to MI limits on expenses)
Fannie Mae transfers property deed to MI company
CAS deal sustains no loss (unless MI limits on expenses apply)
MI QC review uncovers R&W breach and rescinds coverage
Fannie Mae will seek make-whole recoveries from the seller/servicer
for amount equivalent to MI proceeds that are otherwise contractually
due. If Fannie Mae also identifies a R&W breach, seller/servicer may
be responsible for the entire loss.
CAS investor will receive benefit equal to the amount of make-whole
recoveries collected by Fannie Mae
Post-crisis, MI
benefits were reduced
in some cases due to a
Deferred Payment
Obligation (DPO)
imposed by MI
regulators
In this event, Fannie
Mae will step in and
make the CAS investor
whole for the full MI
claim amount due
CAS Mortgage Insurance Primer Presentation
10/18/2017
© 2017 Fannie Mae. Trademarks of Fannie Mae.
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