Magazine article American Banker

Freddie, Fannie Post Robust Portfolio Growth, Credit Quality

Magazine article American Banker

Freddie, Fannie Post Robust Portfolio Growth, Credit Quality

Article excerpt

The mortgage portfolios of Fannie Mae and Freddie Mac grew briskly in August on attractive purchase opportunities. And Freddie increased its upper estimate of growth this year by $5 billion, to $50 billion.

Freddie's portfolio has grown by $42.4 billion for the year so far, bringing it to $206.9 billion at Aug. 31. Fannie's portfolio has grown by $50.9 billion, to $367.2 billion.

"The agencies must be seeing very attractive pricing," said Jonathan Adams, vice president and senior analyst at Prudential Securities, New York.

A lot of sellers are in the market now, he said, because "as rates decline, it shakes a lot of mortgage securities loose from hedge funds and other entities that no longer want to take the prepayment risk."

Freddie's portfolio had a 25% annualized growth rate in August; Fannie's, 24%.

Freddie Mac's numbers are "essentially double what they were projecting at the beginning of the year," said Thomas O'Donnell, senior analyst at Salomon Smith Barney, New York. "Their credit quality continues to improve as well."

Freddie's credit quality is its strongest since early 1991, Mr. O'Donnell said. Delinquencies of 90 days or more were at 50 basis points of the portfolio in July, he said, down from 53 in June.

Multifamily loans delinquent 60 days or more were at 72 basis points, down from 81 in June and from 148 a year earlier.

The reduction in delinquency rates was attributed to an overall improvement in the housing market, including the turnaround in California and improvements in loss mitigation and underwriting standards, Mr. …

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