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Th e M Rep o RT | 59 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SECONDARY MARKET Department mortgage demand down as lending standards steady Fed study finds large banks more inclined to relax credit criteria than smaller institutions. m ortgage credit standards remain largely unchanged even as overall consumer demand weakens, according to a report from the Federal Reserve. The Fed's Senior Loan Officer Opinion Survey, which covers a three-month span ending in October, shows credit standards on prime mortgages remained basically steady over the survey period at 83 percent of reporting banks. Of the nearly 14 percent that reported easing their lending cri- teria somewhat, the vast majority were large banks with assets of $20 billion or more, with only one smaller institution dialing down its standards. Only about 3 percent of banks indicated tighter credit criteria, all of which were classified as smaller companies. The numbers were largely the same for subprime and jumbo/ nontraditional mortgages. Of the handful of banks that cur- rently originate subprime loans, two-thirds said they kept credit standards unchanged, while the remainder were split between somewhat tighter and somewhat weaker criteria. The survey's results reinforce a frequently cited challenge in the current mortgage market, which analysts say caters mostly to bor- rowers with near-pristine credit and excludes those with fair or even good profiles. On net, demand for all mort- gage types weakened, though responses were mixed in each category. For prime loans, 19.4 percent reported moderately stronger demand, while 20.8 percent saw demand weaken moderately. Notably, the majority of banks experiencing increased demand for mortgages were smaller institutions, leaving larger banks fighting over a smaller share of business. The remaining 59.7 percent of surveyed banks reported no significant change in demand. For subprime mortgages, 83.3 percent of banks said they saw no change in demand, while one institution reported a slight weakening. Likewise, more than a quarter of banks said demand for nontraditional mortgages weakened, with only about 6 percent saying demand was moderately stronger. modifications, bringing its tally of loan mods year-to-date as of September 30 to 96,915. Freddie Mac's portfolio also grew in September, marking its second month of positive growth in the year's first nine months. According to the company's vol- ume summary, Freddie Mac's total portfolio grew at an annualized rate of 2.2 percent in September, bringing the year-to-date average growth rate to -1.1 percent. The only other time Freddie's portfolio came up positive this year was in July, when it expanded at a rate of just 0.1 percent. The portfolio's ending balance in September was just less than $1.9 trillion. Overall portfolio growth was accompanied by a slight decline in purchases and issuances to $29.7 billion for the month. That was offset by drops in both sales and liquidations, resulting in a $3.5 billion increase overall. Freddie Mac reported its single-family refinance loan purchase and guarantee volume was $12 billion in September, rep- resenting 45 percent of its total single-family mortgage portfolio purchases and issuances. Relief refinances made up approxi- mately 16 percent of that volume based on unpaid principal bal- ance (UPB). On the multifamily side, new business activity came to $2.8 billion, adding up to $14.1 billion year-to-date through September. The total reflects the UPB of Freddie Mac's multifamily new loan purchases, issuances of other guarantee commitments, and issuances of other structured securities during the month. As business picked up, delinquency improved. Freddie Mac's single-family seriously delinquent rate ticked down for another month to 1.96 percent in September, the company said. The multifamily delinquency rate dropped to 0.03 percent, its second lowest level this year. Freddie Mac reported complet- ing 4,782 loan modifications in September. For the year's first nine months, the company's total loan modifications came to 52,138.