Fannie Mae and Freddie Mac saw declines in the flow of purchase and refinance loans into single-family mortgage-backed securities last month, starting 2018 on a sour note. The two GSEs produced a total of $67.48 billion of new single-family MBS in January, according to a new Inside The GSEs analysis and ranking. That was down 8.8 percent from the previous month and off 26.4 percent from January 2017. It was the GSEs’ weakest monthly output since May 2017, and it would have been worse had Fannie not come up with $4.69 billion in mortgage securities backed by modified loans. Including those mod-backed deals, Fannie issuance was up 5.0 percent from December. Without them, the company’s new MBS issuance fell 5.7 percent in January.
Fannie Mae and Freddie Mac had one of their slowest quarters ever in new credit-risk transfer deals late in 2017, but ended the year with record output all the same.
Ginnie Mae would become the linchpin of the conventional secondary mortgage market of the future, providing an explicit government guarantee for MBS issued by one of several new entities, under a plan being drafted by Senate Republicans.
The National Association of Realtors this week asked the regulator of Fannie Mae and Freddie Mac to lower the MBS guarantee fees charged by the two government-sponsored enterprises, citing lower corporate tax rates ushered in under the Tax Cuts and Jobs Act.
Freddie Mac is offering a new cash benefit to sellers of loans that fall in a narrow band of loan sizes that typically are used for specified MBS pools. The new category targeted for cash deliveries are 30-year fixed-rate mortgages with loan amounts ranging from $175,000 to $200,000.
Departing Federal Reserve Chair Janet Yellen quietly rode off into the sunset this week, with the Fed’s Open Market Committee deciding to keep interest rates unchanged, as expected. The fed funds target range remains at 1.25 percent to 1.50 percent.
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