Magazine article American Banker

GSEs Nipping Top Lenders' Share?

Magazine article American Banker

GSEs Nipping Top Lenders' Share?

Article excerpt

Fannie Mae and Freddie Mac have begun to gradually reduce the market clout wielded by their biggest loan suppliers, an analyst said.

In a report released this week, Moshe Orenbuch at Credit Suisse First Boston Corp. wrote that the 10 lenders that do the most business with either Fannie or Freddie probably got a smaller share of the mortgages that the government-sponsored enterprises either bought or guaranteed last year. And in an interview, he said he expects the trend to continue this year.

Beginning in 1999, the GSEs forged more or less exclusive alliances with lending Goliaths to lock in giant volumes of loans. Both are widely believed to have made pricing concessions in return for a piece of lenders' pipelines, though they will neither confirm nor deny this.

Under the first such alliance, between Freddie and Wells Fargo & Co., Freddie buys or provides a credit guarantee for all of Wells' conforming loans. Fannie has a similar alliance with Countrywide Financial Corp.

As a result of such deals, the lion's share of loans bought or guaranteed by the two GSEs now comes from the top 10 producers. These lenders accounted for 61.4% of Freddie's loan purchase volume in 2001, the most recent year for which data are available, up from 37.4% in 2000 and 35.7% in 1999. Wells Fargo, Freddie's largest producer, alone was responsible for 25% in 2001, against 18.6% in 2000 and 14.4% in 1999.

As for Fannie, the top 10 lenders originated 51.1% of 2001 volume, up from 42. …

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