MReport May 2018

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TH E M R EP O RT | 63 SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T GSEs Nonbank Originations on the Rise A new report examined G-fees, mortgage delinquency rates, and nonbank originator shares in the agency market. M ortgage origination profitability fell to its lowest in January 2018 as mortgage volumes responded to the rising interest rates during the month according to data in the Febru - ary 2018 edition of At A Glance, a monthly reference guide and report for mortgage and hous- ing market data released by The Urban Institute's Housing Finance Policy Center. Using data from Originator Profitability and Unmeasured Costs (OPUC) formulated and calculated by the Federal Reserve Bank of New York, the report found that over the last four years, OPUC has ranged from a high of $3.24 in 2016 when rates were low to around $2 between 2016 and 2018 when rates were high. However, in January 2018, OPUC stood at $1.88 which is the lowest in four years, indicating that interest rates were high dur - ing this period. The report also includes updated figures describing GSE guarantee fees, mortgage delin- quency rates, nonbank originator shares in the agency market and the composition of the mortgage insurance market. In a trend that has continued since 2013, the origination share for nonbank loans increased for Fannie Mae, Freddie Mac, and Ginnie Mae. The report indicated that Ginnie Mae's nonbank share edged up to a new high of 81 percent in January 2018, while nonbank originator shares for Freddie Mac and Fannie Mae both moved back towards the his - toric highs reached in November 2017, after a dip in December. The nonbank originator share was higher for refinance loans than for purchase loans across all three agencies. According to the report, outstanding mortgage-backed securities in the agency market totaled $6.40 trillion of which 43.8 percent securities were for Fannie Mae, 27.4 percent for Freddie Mac, and 28.9 percent were for Ginnie Mae. Ginnie Mae has had more outstanding securities than Freddie Mac since May 2016. Access to credit, especially for borrowers with low FICO scores remained tight even as the housing market values increased driven by growing household equity, the report noted. The report noted that de - linquencies in the hurricane- impacted areas of Texas, Florida, and Puerto Rico continued to rise during the last quarter, with the 90-day delinquency rates touching higher for Puerto Rico than it did for Florida or Texas. While these rates are expected to decline in this quarter as many of these loans get resolved through reperformance, the report expects the problem to continue in Puerto Rico where only 40 percent of homes have mortgages compared with 64 percent in the U.S. Off to a Strong Start Freddie Mac's portfolio increased by $2.4 billion, according to the company's Monthly Volume Summary. F reddie Mac has released its latest Monthly Vol- ume Summary, which provides information on Freddie Mac's mortgage-related portfolios, securities issuance, risk management, delinquen - cies, debt activities and other investments. This latest Monthly Volume Summary is comprised of data from January 2018. Freddie Mac's Monthly Volume Summary for January reveals that Freddie's total mortgage portfolio increased at an annualized rate of 0.3 percent in January. This is down quite a bit compared to January 2017, when Freddie's portfolio increased at an annual - ized rate of 3.7 percent. It's much closer to the January 2016 rate of 1.6 percent. The aggregate unpaid principal balance of Freddie's mortgage-relat - ed investments portfolio increased by approximately $2.4 billion in January 2018, a jump of nearly $2 billion over the monthly total increase from a year prior ($0.5 billion in January 2017). It's still shy of the aggregate unpaid principal balance from January 2016—$2.7 bil - lion, according to Freddie's records. Freddie reports that the single- family seriously delinquent rate (representing loans more than 90 days overdue) decreased from 1.08 percent in December to 1.07 percent in January. For compari - son's sake, the seriously delinquent rate decreased from 1.00 percent in December to 0.99 percent in January. Stepping back another year, Freddie's seriously delinquent rate for January 2016 came in at 1.33 percent—a far cry from the 3.20 percent rate logged in January 2013. (Fannie Mae also showed a decreasing single-family seri - ous delinquency rate in January 2018, dropping 1 basis point to 1.23 percent.) Freddie's single-family refinance- loan purchase and guarantee volume was $9.3 billion for January 2018, representing 41 percent of total single-family mortgage portfolio purchases and issuances. This is compared to $20.9 billion in January 2017, when single- family refinance-loan purchase and guarantee volume represented 59 percent of total single-family mortgage portfolio purchases and issuances. During January 2017, ap - proximately 5 percent of Freddie's total single-family refinance volume was comprised of relief refinance mortgages. What were those numbers in January 2016? According to Freddie, single-family refinance-loan purchase and guar - antee volume was $34.5 billion in January, representing 80 percent of total mortgage portfolio purchases or issuances.

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