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INVESTMENT GOVERNMENT PROPERTY PRESERVATION
FHFA ANNOUNCES
DEEMED-
ISSUANCE RATIO
FOR NEXT YEAR
e Federal Housing Finance Agency
(FHFA) has announced the deemed-issuance
ratio for the 2022 calendar year in accordance
with Internal Revenue Service (IRS) guidelines
on the trading of the Uniform Mortgage-
Backed Security (UMBS).
e deemed-issuance-ratio is used
for diversification reporting on the bonds
ultimately delivered to the purchaser until the
bonds have been disposed of, regardless of the
issuing Enterprise on the underlying bonds.
e IRS Revenue Procedure 2018-54
provides that the ratio may be rounded if the
rounded ratio is further from 50/50 than the
actual observed data. e deemed-issuance
ratio for 2022 calendar year is 56% Fannie Mae,
and 44% Freddie Mac.
e IRS procedure provides guidance
on Section 817(h) of the Internal Revenue
Code diversification requirements for variable
annuity, endowment, and life insurance
contracts. e IRS has provided a deemed-
issuance-ratio to allocate issuer exposure
for TBA trades between the Government-
Sponsored Enterprises (GSEs). Compliance
with these requirements is affected by the
implementation of and trading in UMBS.
Revenue Procedure 2018-54 calls for the
FHFA to determine a deemed-issuance ratio
for each calendar year based on the ratio of
TBA-eligible securities issued by the GSEs
during the 24-month period ending October 31
of the preceding year.
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