April 2016 - Tech Revolution

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 63 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 LOCAL EDITION LOCAL EDITION LOCAL EDITION Freddie Mac Prices Credit Risk Transaction at Nearly a Half-billion Dollars THE NEW POOL OF LOANS IS FREDDIE'S SECOND CREDIT RISK TRANSACTION THIS YEAR, AND THE GSE ALSO RECENTLY ANNOUNCED ENHANCED DISCLOSURES FOR ITS TRANSFERS. VIRGINIA // Freddie Mac announced it priced its second Structured Agency Credit Risk (STACR) transaction of 2016 at $475 million. The transaction, STACR 2016-HQA1, contains loans with LTVs ranging from 80 to 95 percent, according to Freddie Mac. The reference pool consists of single-family mortgages with an aggregate unpaid principal balance (UPB) of $17.5 billion. The pool contains a subset of 30-year fixed-rate single-family mortgages Freddie Mac acquired during a three-month period between April 1, 2015, and June 30, 2015, according to Freddie Mac. "We saw secondary spreads tighten with this transaction," said Mike Reynolds, VP of Credit Risk Transfer for Freddie Mac. "This may be the reversal of spreads widening." Co-lead managers and joint bookrunners for the transaction are Barclays and Wells Fargo Securities, according to Freddie Mac. Co-managers are Cantor Fitzgerald, Deutsche Bank Securities, JPMorgan, and Nomura. Freddie Mac began its credit risk transfer sharing initiatives in 2013 as a way to transfer a portion of the risk on residential single-family mortgages to private investors and away from taxpayers. Last month, Freddie Mac announced enhanced disclosures for its single-family credit risk transfer initiatives that included quarterly updates of credit scores for outstanding loans in all transactions, updated mark-to-market LTVs provided quarterly, loan-level mortgage insurance details, and details on loan modifications such as the type of modification and the program it was completed through. In early February, Freddie Mac announced its first ACIS transaction of 2016, with a combined maximum limit of approximately $450 million of losses on single-family loans. Through its credit risk transfer initiatives, Freddie Mac has transferred a substantial portion of credit risk for more than $422 billion in UPB on single-family mortgages. The Enterprise's investor base has grown to more than 190 unique investors (including reinsurers). Fannie Mae's Mortgage Portfolio Kicks Off 2016 With Rare Expansion JANUARY WAS ONE OF FOUR MONTHS SINCE JUNE 2010 IN WHICH FANNIE'S GROSS MORTGAGE PORTFOLIO GREW. WASHINGTON, D.C. // In the first monthly volume summary of 2016, Fannie Mae's gross mortgage portfolio experienced a rare month of expansion, increasing at a compound annualized rate of 5 percent for January. The increase amounted to about $1.4 billion, raising the amount of unpaid principal balance (UPB) of loans in the portfolio up to ap - proximately $346.5 billion. January's increase ended nine consecutive months of contraction for the portfolio, and followed a full year in which the portfolio contracted at a rate of 16.5 percent. January marked only the fourth month out of the last 66 since June 2010 for growth in Fannie Mae's gross mortgage portfolio (March 2015, January 2015, and December 2012 were the other three months.) At the beginning of that stretch in June 2010, the amount of UPB of the loans in the portfolio was $818 billion. Despite having contract - ed in all but four months in the last five and a half years, it has expanded for two consecutive Januarys. With January's expansion, the value of UPB of the loans in the portfolio remained slightly higher than the 2016 cap, which is $339.4 billion. Fannie Mae's total book of business, which includes the gross mortgage portfolio plus total Fannie Mae mortgage- backed securities and other guarantees minus Fannie Mae MBS in the portfolio, declined at a compound annualized rate of 0.9 percent in January down to a value of about $3.097 trillion. The book of business contracted in eight months in 2015 at a rate of 0.8 percent for the year, ac - cording to Fannie Mae. The serious delinquency rate on single-family loans backed by Fannie Mae held steady from December to January at 1.55 percent, which is consistent with the level reported in September 2008, the month during which Fannie Mae was taken into con - servatorship by the FHFA. The number of loan modifica- tions completed by Fannie Mae was nearly unchanged from December to January at 6,451 (compared to 6,599). The month- ly average of loan modifications completed by Fannie Mae has been on a steady decline; for 2014, the monthly average was 10,235. For 2015, the monthly average declined to 7,851. SECONDARY MARKET January marked only the fourth month out of the last 66 since June 2010 for growth in Fannie Mae's gross mortgage portfolio

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