Most of the industry's pullback in ABS holding resulted from portfolio trimming by the three largest bank investors. Total ABS outstanding rose sharply in the second quarter.
Fannie, Freddie and Ginnie issued a combined $170.7 billion in new single-family MBS in August, their highest monthly volume since November 2012. A big surge of refinance business was a major factor.
Private MIs and Freddie Mac posted relatively larger gains in first-time buyer business during the second quarter, though the government-insured market was still the biggest source of such loans.
Production of expanded-credit mortgages increased in the second quarter but not by nearly as much as the surge in total originations. The sector was crowded out to some extent by conventional loan refinances.
Holdings of first liens by banks and thrifts increased in the second quarter. JPMorgan Chase ranked second with a portfolio of $231.21 billion, but its holdings were off on both a quarterly and an annual basis.
The combined delinquency rate of the entire FHA portfolio rose by 94.8 basis points in the second quarter, returning to normal levels following a dip in 1Q19. The increase was fueled by short-term late payments.
Mortgage banking income was up in the second quarter but didn’t keep pace with big increases in loan origination volume and secondary market sales. Wells Fargo accounted for the lion’s share of the increased profitability.
Purpose and production channel matter in loan credit characteristics but the biggest difference maker is whether the mortgage has a government guarantee.
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