Fannie Delinquency Rate At 2.96% In Feb Vs 2.77% In Jan
April 30 2009 - 4:14PM
Dow Jones News
Fannie Mae's (FNM) volume of refinanced mortgages hit a high in
March, its largest since 2003.
The mortgage company, which is under government conservatorship,
said its refinancing volume perked up to $77 billion as mortgage
rates dropped to below 5%, according to a monthly report released
Thursday.
Fannie expects a further increase under the Obama
administration's Making Home Affordable Program, which widens the
eligibility of homeowners for refinancing.
Meanwhile, the mortgage finance company said its delinquency
rate continued to rise to 2.96% in February from 2.77% in January.
This compares to a delinquency rate of 1.06% in January 2008.
The company says these numbers are elevated as a result of its
moratorium on foreclosures that ended in March.
Market participants say that even though these numbers are still
low compared to the averages on other kinds of mortgages, it
represents an increased stress on the company from its mortgage
holdings. These numbers are expected to rise as the unemployment
rate continues to tick upwards, and job losses drag even
creditworthy borrowers into missing payments.
On the business front, Fannie committed to buy nearly $5.4
billion of mortgage bonds in March, up from its net commitments of
nearly $2.4 billion in February.
The mortgage giant's investment portfolio shrunk by 1.3%,
keeping its total balance at $783.868 billion, well short of the
curbs set by its regulator, according to a monthly report from the
company.
Over the past couple of months, the role of Freddie Mac (FRE)
and its sibling Fannie in the mortgage market have diminished as
both the U.S. Treasury and the Federal Reserve Board have emerged
as backstop buyers with deep pockets.
However, market participants still keep tabs on Fannie and
Freddie's portfolios as an indication of their financial health,
and their ability to continue to play a role as both guarantors and
buyers of mortgage bonds.
Meanwhile, Fannie Mae's total book of business increased at an
annualized compound rate of 12.3% in March.
Total Fannie Mae issuance of mortgage bonds increased to $87.8
billion in January, nearly double its February volume of $45.3
billion.
Issuance of Fannie Mae securities and other guarantees increased
at a compounded annualized rate of 15.4% during the month.
Fannie's duration gap, a measure of the portfolio's sensitivity
to interest rates, averaged two months in March, up from two in
February.
Freddie and Fannie are chartered by Congress to buy mortgages
from lenders, freeing them to make more loans.
They repackage the mortgages as securities and sell them again.
Both also hold on to large quantities of mortgage securities,
profiting from the difference between the interest rates they pay
and the cost of debt issued to fund their purchases.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071;
prabha.natarajan@dowjones.com