Game Change

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the latest SECONDARY MARKET Or ig i nat ion FHFA Price Index Up 0.7% in April Housing prices continue to trend positively as the year progresses. The GSE saw an uptick in its mortgage portfolio in May. F annie Mae's total book of business bumped up just slightly again in May, even as its mortgage portfolio continued to contract. According to Fannie Mae's monthly volume summary, the GSE's book of business grew at a compound rate of 0.3 percent in May, just edging out April's 0.2 percent growth and bringing the year-to-date monthly average to a negative value of 0.9 percent. As of the end of the month, the book's value totaled approximately $3.179 trillion. New business acquisitions totaled $78 billion in May, up from $77.3 billion in April and $71.6 billion in May 2012. Meanwhile, the mortgage giant's gross mortgage portfolio shrank once again, contracting at an annual rate of 23.7 percent and dropping to a value of $574.9 billion—a decline of more than $13 billion from April. Year-to-date, the portfolio has an average contraction rate of 20.7 percent. The conventional single-family serious delinquency rate fell 10 basis points to 2.83 percent in May, while the multifamily serious delinquency rate dropped 6 basis points to 0.3 percent. Fannie Mae completed 13,650 loan modifications in May, bringing the year's total to 70,544. Mortgage giants agree to a deal that will rectify repurchase claims made in the early aughts. C itigroup and Fannie Mae announced an agreement to resolve future repurchase claims for breaches of representations and warranties on millions of loans originated between 2000 and 2012. According to release from Citi, the agreement covers 3.7 million residential first mortgage loans sold to Fannie. Citi is not released from liability regarding servicing or other ongoing contractual obligations on those loans; the bank is also still responsible for a population of less than 12,000 loans originated in the same time frame with certain characteristics such as those sold with a performance guaranty or under special credit enhancement programs. As part of the agreement, Citi will pay Fannie $968 million, "substantially all of which was covered" by the bank's existing mortgage repurchase reserves as of the end of the first quarter. Citi estimates it will record a residential mortgage repurchase reserve build of $245 million in its next quarterly earnings report and believes "it is adequately reserved for the loans not covered by the agreement." "We have a strong and productive relationship with Fannie Mae . . . . As we work to deepen and enhance financial relationships with our clients, we will continue to focus on the production of high-quality mortgage loans," said CitiMortgage CEO Jane Fraser. Citi also said in its release it will continue to work with Fannie Mae on the timely repurchase of any mortgages sold to the GSE that do not meet its requirements. "This resolution is an example of our desire to work together with our business partners to find common ground. Today's agreement resolves legacy repurchase issues, compensates taxpayers for losses, and allows Fannie Mae and Citi to move forward and strengthen our business relationship," said Bradley Lerman, EVP and general counsel at Fannie Mae. "We continue to focus on making strong progress in resolving repurchase requests with other lenders and remain committed to helping people to buy, refinance, or rent a home." The M Report | 77 se c on da r y m a r k e t Fannie Mae Book of Business Grows Citi, Fannie Announce $968M Repurchase Agreement A na ly t ic s price changes ranged from a low of -0.2 percent in the New England, South Atlantic, and West South Central divisions to a high of +2.2 percent in the Mountain division. Year-overyear, changes ranged from +2.9 percent in the Middle Atlantic division. to +17.1 percent in the Pacific division. The HPI is calculated using home sales price information from mortgages sold to or guaranteed by the GSEs. FHFA's index was released on the same day as the Case-Shiller Home Price Indices, which registered record monthly gains in April. s e r v ic i ng T he Federal Housing Finance Agency (FHFA) reported a 0.7 percent increase in its House Price Index (HPI) from March to April. As of April, the index stood at a reading of 200.8. March's index, meanwhile, was revised upward to 199.4 (a 1.5 percent increase as opposed to the original estimated gain of 1.3 percent). Year-over-year, the HPI was up 7.4 percent. The latest increase marks the 15th straight monthly price improvement in the purchase-only, seasonally adjusted index. For the nine Census divisions, seasonally adjusted monthly

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