The GSEs’ low-downpayment products designed to loosen credit availability have been slow to pick up steam. Freddie Mac introduced its 97 percent loan-to-value program in March 2015, on the heels of Fannie Mae kicking off its 97 LTV program in December 2014. The CEOs of both companies recently said that so far the volume of low-downpayment purchase loans in GSE business is relatively small. Freddie CEO Donald Layton said during last week’s earnings call, “Actually the numbers have not grown large enough to be reporting level in terms of size.” Fannie echoed that sentiment in its earnings call and said it introduced the 97 LTV product as part of its effort to create programs that make credit available on a broader basis.

Both Freddie Mac and Fannie Mae reported second-quarter earnings last week that were significantly higher than the first quarter, thanks primarily to rising interest rates. Freddie posted a net income of $4.17 billion, compared to $524 million in the first quarter. In addition to higher interest rates, the GSE attributed the increased income to a steeper yield curve and $3.1 billion in derivative gains. That gain represents a big comeback from the $2.4 billion in derivative losses in the first quarter. Fannie reported a net income of $4.64 billion, compared to $1.89 billion in the first quarter. Fannie said that number was largely driven by guaranty fee income in the second quarter.

The smaller apartment building market has become a part of Freddie’s risk-transfer program as the GSE guaranteed its first multifamily small-balance loan securitization last week. This new credit risk- transfer is composed of multifamily mortgage-backed securities by small-balance loans underwritten by Freddie and issued by a third-party trust. Freddie said the goal is to more effectively provide liquidity and service to markets that are less populated and to smaller apartment communities with between five and 50 units. Approximately 31 percent of U.S. renter households live in apartment properties this size, said the GSE. In these deals, Freddie is selling the first-loss position, which allows it to unload substantially all of the credit risk associated with the small-balance loans.

Homeowners may be selling themselves short when it comes to the amount of equity in their homes and faulty valuation tools may be the culprit, says a new Fannie Mae analysis released last week.As many as 15 million homeowners are underestimating how much equity they’re actually sitting on, especially as house prices continued to rise over the past several years. CoreLogic estimates of the percent of homeowners having significant home equity was much higher than the percent who actually perceived themselves as having equity in Fannie consumer surveys. Many homeowners also mistakenly think a large downpayment is required to buy a home, according to data from Fannie’s National Housing Survey. This means the number of consumers...

Redwood Trust set up a new risk-sharing agreement with Freddie Mac last month. This makes the real estate investment trust the first to execute proprietary risk-sharing arrangements with both GSEs. In the arrangement with Freddie, Redwood commits to absorb the first 1 percent of credit losses on up to $1 billion of new conforming loans it expects to deliver to Freddie over the course of the third quarter of 2015. Redwood said this is done through a special-purpose entity. The REIT entered into the risk-sharing agreement with Freddie in July and had already been in a risk-sharing transaction with Fannie since the fourth quarter of 2014. In that transaction, Redwood sold protection on the first 1 percent of losses on a $1.1 billion Fannie pool.

A big part of Freddie’s sharp increase in issuance came from the $8.00 billion of seasoned loans the company securitized in July.

Real estate investment trusts that focus on the MBS market saw the value of their holdings slump again during the volatile second quarter of 2015. Top mortgage REITs reported a fair market value of $249.10 billion for their single-family MBS holdings as of the end of June. That was down 5.6 percent from the previous quarter, and it was the group’s lowest MBS portfolio valuation since the fourth quarter of 2011. The decline came...[Includes one data table]

It was the group’s lowest MBS portfolio valuation since the fourth quarter of 2011.

The cover bids on some past Freddie NPL pools have been in the mid-70s to low 80s (on the dollar) as a percentage of the unpaid principal balance.

Emerging eClosing technology may make borrowers a little smarter, according to the Consumer Financial Protection Bureau, but it isn’t easy for lenders to implement. A CFPB report on the agency’s eClosing project found that borrowers who participated in the pilot scored slightly higher in a quiz on the closing process than did those who relied on good-old paper. The eClosers were...