Why are Fannie and Freddie Notes considered CLNs?
Why are Fannie and Freddie Notes considered CLNs?
Since the notes derive their value from the cash flows associated with a reference pool of credit-risky assets, they are considered to be credit-linked notes (CLNs). Investors in the notes share any credit losses with Fannie and Freddie.
Why are Fannie Mae and Freddie Mac important?
Fannie Mae and Freddie Mac have taken great pains to explain their underwriting standards and quality control when purchasing the individual loans. They provide extensive data, such as historical defaults, as well as transparency in the underlying pools, so that investors may make informed investment decisions.
Why do Fannie and Freddie keep the vertical slice?
The tranches that are followed by the letter “H” are retained by Fannie and Freddie. The vertical slice is kept by Fannie/Freddie to keep their interests aligned with those of the investors.
What do you need to know about a Freddie Mac mortgage?
The Mortgage file must contain a copy of the lease agreement, PPA or similar type of agreement, as applicable. Loan Product Advisor calculates and evaluates the Borrower’s qualifying ratios. For Accept Mortgages and A-minus Mortgages, Loan Product Advisor has determined that the Borrower’s qualifying ratios are acceptable.
When do you need a higher qualifying ratio for Freddie Mac?
When the Borrower’s monthly debt payment-to-income ratio exceeds 36%, the Seller must document in the file the justification for the higher qualifying ratio.
Since the notes derive their value from the cash flows associated with a reference pool of credit-risky assets, they are considered to be credit-linked notes (CLNs). Investors in the notes share any credit losses with Fannie and Freddie.
The tranches that are followed by the letter “H” are retained by Fannie and Freddie. The vertical slice is kept by Fannie/Freddie to keep their interests aligned with those of the investors.