A bird's-eye view suggests retail originations had higher credit scores and lower DTI ratios than loans produced by correspondents and brokers. But third-party originators generated lower-risk loans at the agency level.
Fannie increased its issuance of credit-risk transfer debt notes in the first quarter, while Freddie production was down. Both GSEs stepped up their use of reinsurance to transfer risk.
The two largest REIT investors in the MBS market added a combined $22.8 billion of agency MBS to their portfolios in the first quarter, boosting the industry to a record $308.1 billion in residential mortgage securities investment.
Conventional-conforming lending still accounted for over half of first-lien originations in early 2019, but the sector also saw the biggest rate of decline from the previous period. Booming refi business helped the jumbo market.
Ginnie Mae MBS production rose in April thanks to strong increases in both purchase and refinance business. Rate-term transactions accounted for much of the surge in refi activity, but cash-out deals remain the most prevalent.
Retained mortgage portfolios at Fannie Mae and Freddie Mac were relatively unchanged in the first quarter as increases in MBS holdings offset declines in whole loans. The portfolios still generate earnings, but guarantee business is the biggest source of income.