Compagnie de Financement Foncier (CFF): A Key Player in French Mortgage Finance

Compagnie de Financement Foncier (CFF) is a leading French credit institution specializing in refinancing mortgage loans granted by its parent company, Crédit Foncier de France (CFF). While Crédit Foncier de France is no longer originating new loans, CFF remains a vital entity ensuring the smooth operation and funding of the existing mortgage portfolio.

CFF operates as a “Société de Crédit Foncier” (SCF), a specialized type of French credit institution. SCFs are authorized to issue covered bonds, known as obligations foncières, which are secured by a pool of eligible assets, predominantly mortgage loans. This structure provides investors with a high degree of security, typically reflected in the strong credit ratings assigned to CFF’s obligations foncières.

The primary function of CFF is to refinance the mortgage loans originated by Crédit Foncier de France. This refinancing is achieved through the issuance of obligations foncières. The proceeds from these bond issuances are then used to acquire the mortgage loan portfolio from its parent company. This mechanism essentially transforms the illiquid assets (mortgages) into highly liquid and marketable securities (covered bonds).

The legal framework governing SCFs in France is particularly robust, offering a high level of investor protection. Strict regulations define the types of assets that can be used as collateral, the loan-to-value ratios allowed, and the oversight mechanisms in place. This regulatory framework, coupled with the inherent quality of the underlying mortgage portfolio, contributes to the safety and attractiveness of obligations foncières issued by CFF.

CFF’s obligations foncières are considered a benchmark in the European covered bond market. The large issuance volumes, coupled with their strong credit ratings and liquidity, make them a preferred investment choice for institutional investors seeking stable and secure fixed-income assets. The success of CFF in issuing obligations foncières is crucial for maintaining the flow of funds to the mortgage market and supporting homeownership in France.

Although Crédit Foncier de France has ceased originating new loans, CFF continues to play a significant role in managing and refinancing the existing portfolio. Its activities ensure the continued availability of financing for homeowners and contribute to the stability of the French financial system. The company’s focus remains on efficient portfolio management, maintaining strong asset quality, and issuing obligations foncières to meet its refinancing needs.

In summary, Compagnie de Financement Foncier is a key component of the French mortgage finance landscape. Its specialized structure, strong regulatory oversight, and commitment to maintaining the quality of its underlying assets make it a reliable issuer of covered bonds and a vital contributor to the stability of the housing market.

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