Why Ginnie Mae TBAs sold off in thin holiday trading

Must-know releases for REITs and homebuilders this week (Part 5 of 6)

(Continued from Part 4)

Ginnie Mae TBAs represent the mortgage-backed security for government mortgage loans

While Fannie Mae TBAs represent the usual conforming loan—the plain vanilla Fannie Mae 30-year mortgage—Ginnie Mae TBAs are where government loans like FHA and VA loans go. The biggest difference between a Fannie Mae MBS and a Ginnie Mae MBS is that Ginnies have an explicit guarantee from the Federal government. Fannies do not, although there is a “wink wink, nudge nudge” guarantee. As a result, Ginnie Mae MBS trade at a premium to Fannie Mae TBAs.

There are also two different Ginnie Mae TBAs: Ginnie 1s and Ginnie 2s. Ginnie 1 TBAs include mortgages with the exact same coupon payment. Ginnie 2 TBAs can include a variety of coupons within a range. Because the investor can have more certainty with Ginnie 1s versus the 2s, the 1s typically trade at a premium. This premium can vary, and you’ll often see investors switch between 1s and 2s as a relative value trade. The Ginnie Mae 1s tend to be more liquid than the 2s and have narrower bid-to-ask spreads.

Ginnie Mae MBS sell off on thin holiday trading

The front-month Ginnie Mae TBA drifted higher as bonds rallied. After starting the week at 105 13/32, they lost about 7/16 to close at 104 31/32.

Implications for mortgage REITs

Mortgage REITs—like Annaly Capital (NLY), American Capital (AGNC), MFA Financial (MFA), and Capstead Mortgage (CMO)—announced big drops in book value per share, as rising rates hurt the value of their mortgage-backed security holdings. The REIT sector spent most of 2013 de-leveraging to position itself for increases in rates.

As a general rule, a lack of volatility is good for mortgage REITs and the mortgage REIT ETF (MORT) because they hedge some of their interest rate risk. Increasing volatility in interest rates increases the cost of hedging. This is because as interest rates rise, the expected maturity of the bond increases, as there will be fewer pre-payments. On the other hand, if interest rates fall, the maturity shortens due to higher pre-payment risks. Mechanically, this means mortgage REITs must adjust their hedges and buy more protection when prices are high and sell more protection when prices are low. This “buy-high, sell low” effect is called “negative convexity,” and it explains why Ginnie Mae MBS yield so much more than Treasuries that have identical credit risk (which is to say none). Investors who want to make directional bets on Treasuries should look at the iShares 20 year bond ETF (TLT).

Continue to Part 6

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Fannie Mae Prices $896M REMIC; Issues $3.5BN MBS YTD

WASHINGTON, DCFannie Mae has priced its fourth Multifamily DUS REMIC for the year, totaling $896.4 million under its Fannie Mae Guaranteed Multifamily Structures program. Separately, the GSE announced that it has issued approximately $3.5 billion of multifamily MBS in the first quarter of 2014, backed by new multifamily loans delivered by its lenders. It also resecuritized $3.3 billion of DUS MBS through the GeMSTM program in the first quarter of the year.

The former-the $896.4 million REMIC-as far as Fannie Mae transactions go, was completely straightforward. Ditto the latter, which were up by a slight $100 million year over year, Manny Menendez, senior vice president of Multifamily Capital Markets Pricing, tells GlobeSt.com. This year, however, MBS issuance has dropped because market activity in general is down, he also notes.

The latest REMIC brought to market, though, points to ongoing demand for these securities despite blips in the market.

“Investors had to contend with some rate volatility while the book was building,” according to Josh Seiff, Fannie Mae Vice President of Multifamily Capital Markets. “Once rates stabilized a bit, we saw strong demand for shorter bonds backed by seasoned collateral and 10-year cash flows.”

“We are very pleased we are able to continue to issue these on a regular schedule,” Menendez says.

Why Fannie Mae securities followed bonds lower last week

Must-know releases for REITs and homebuilders this week (Part 4 of 6)

(Continued from Part 3)

Trading in Fannie Mae TBAs 

When the Federal Reserve talks about buying mortgage-backed securities (or MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can be traded. TBAs settle once a month, and Fannie Mae loans are put into Fannie Mae securities. TBAs are broken out by coupon rate and settlement date. In the chart below, we’re looking at the Fannie Mae 4% coupon for May delivery.

The TBA market is the basis for which your loan originator prices a loan

When the originator offers a loan to you (as a borrower), your rate is at par, give or take any points you’re paying. Your originator will then sell the loan into a TBA. If you’re quoted a 4% mortgage rate with no points, the lender will fund your loan and then sell it for the current TBA price. In this case, the TBA closed at 103 31/32, which means your lender will make just over 4% before taking into account the cost of making the loan. The Fed is the biggest buyer of TBA paper. Other buyers include sovereign wealth funds, countries with trade surpluses with the U.S., and pension funds. TBAs are a completely “upstairs” market in that they don’t trade on an exchange and most trading is done “on the wire,” or over the phone.

TBAs sell off in a thin market

Fannie Mae MBS followed the bond market lower. Last week was when most of the Street rolled its April exposure to May. Liquidity has been downright terrible in the TBAs lately. The Fannie Mae 4% TBA started the week at at 104 15/32 and picked up just over half a point to close at 103 31/32.

The main action driving TBAs specifically seems to be out of Washington, between the Fed purchases and the government’s policies to drive origination. J.P. Morgan (JPM) kicked off earnings season for the banks and reported that things are dismal in mortgage banking. Wells Fargo (WFC) did a little better, but not by much.

Implications for mortgage REITs 

Mortgage REITs and ETFs such as Annaly (NLY), American Capital (AGNC), Capstead Mortgage (CMO), the iShares 20-year bond ETF (TLT), and the Mortgage REIT ETF (MORT) are the biggest beneficiaries of quantitative easing, as quantitative easing helps keep REITs’ cost of funds low and they benefit from mark-to-market gains. This means their existing holdings of mortgage-backed securities are worth more as the TBA market rises. The downside is that interest margins compress going forward, because yield moves inversely with price. Also, as MBS rally, prepayments are likely to increase, which negatively affects mortgage REITs.

As a general rule, a lack of volatility is good for mortgage REITs because they hedge some of their interest rates risk. Increasing volatility in interest rates increases the cost of hedging. This is because as interest rates rise, the expected maturity of the bond increases, as there will be fewer prepayments. On the other hand, if interest rates fall, the maturity shortens due to higher prepayment risks. Mechanically, this means they must adjust their hedges and buy more protection when prices are high and sell more protection when prices are low. This “buy-high, sell-low” effect is called “negative convexity,” and it explains why Fannie Mae MBS yield so much more than Treasuries.

While Fannie Mae mortgages don’t have an explicit government guarantee, they are “government-sponsored” and considered to be guaranteed by the government. That said, Ginnies and Fannies do trade at a spread to each other, with Ginnies trading at a premium because of their explicit government guarantee.

Continue to Part 5

Browse this series on Market Realist:

Fannie Mae, Freddie Mac Should Be Designated As SIFI

With about 60% of the credit risk of the huge American housing finance market, the two GSEs should be tagged as SIFI

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Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) are huge in size, huge in global systemic risk, close to zero in capital and hence should get SIFI status, believes Alex J. Pollock of American Banker.

Fannie Mae Freddie Mac Glassman

According to Alex J. Pollock, considering their massive asset size and extreme leverage, the two GSEs should be designated as SIFI by the Financial Stability Oversight Council (FSOC)

SIFI tag from FSOC

The FSOC has powers under Dodd-Frank financial reform legislation to place institutions under enhanced oversight. A company getting the SIFI tag would be required to conform to various requirements including risk-based capital, leverage liquidity, stress-testing, overall risk management, resolution plans, as well as early remediation and credit concentration.

American International Group Inc (NYSE:AIG) and Prudential Financial Inc (NYSE:PRU) have already been designated SIFIs and Metlife Inc is currently in the third stage of the process and expected to be designated a SIFI as well.

GSEs are extremely leveraged

Considering Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA)’s total assets are bigger than JPMorgan Chase Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) and Fannie and Freddie are each bigger than Citigroup Inc. (NYSE:C), Wells Fargo Company (NYSE:WFC), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), Prudential Financial Inc (NYSE:PRU) and American International Group Inc (NYSE:AIG), Alex J. Pollock writes if anybody at all is a SIFI, then the two GSEs are SIFIs.

Moreover, with $3.3 trillion in assets, Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) would make it the No. 1 SIFI of all, while Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) would rank at No. 4 with $2 trillion in assets.

The two GSEs are also extremely leveraged with Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) leveraged at 341.1 and a leverage capital ratio of a risible 0.29%, while Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) has leverage ratio of 153:1 and a leverage capital of an almost as risible 0.65%.

Recently, PIMCO’s CEO Douglas Hodge highlighted the huge size of the two GSEs. He pointed out that today 99% of all Mortgage Backed Securities are backed by these two GSEs and if President Obama plans to wind down the GSEs, there will be a problem as there will not be much appetite from institutions like PIMCO for MBS not backed by the two GSEs.

Alex J. Pollock points out over $5 trillion of the obligations of these hyper-leveraged institutions are widely held throughout the U.S. financial system and around the world by banks, central banks, other official bodies and many other investors. He is surprised at FSB not designating the two GSEs as G-SIFIs.

Fannie Mae, Freddie Mac Should Be Designated As SIFI

With about 60% of the credit risk of the huge American housing finance market, the two GSEs should be tagged as SIFI

Tweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+Email this to someone

Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) are huge in size, huge in global systemic risk, close to zero in capital and hence should get SIFI status, believes Alex J. Pollock of American Banker.

Fannie Mae Freddie Mac Glassman

According to Alex J. Pollock, considering their massive asset size and extreme leverage, the two GSEs should be designated as SIFI by the Financial Stability Oversight Council (FSOC)

SIFI tag from FSOC

The FSOC has powers under Dodd-Frank financial reform legislation to place institutions under enhanced oversight. A company getting the SIFI tag would be required to conform to various requirements including risk-based capital, leverage liquidity, stress-testing, overall risk management, resolution plans, as well as early remediation and credit concentration.

American International Group Inc (NYSE:AIG) and Prudential Financial Inc (NYSE:PRU) have already been designated SIFIs and Metlife Inc is currently in the third stage of the process and expected to be designated a SIFI as well.

GSEs are extremely leveraged

Considering Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA)’s total assets are bigger than JPMorgan Chase Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) and Fannie and Freddie are each bigger than Citigroup Inc. (NYSE:C), Wells Fargo Company (NYSE:WFC), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), Prudential Financial Inc (NYSE:PRU) and American International Group Inc (NYSE:AIG), Alex J. Pollock writes if anybody at all is a SIFI, then the two GSEs are SIFIs.

Moreover, with $3.3 trillion in assets, Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) would make it the No. 1 SIFI of all, while Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) would rank at No. 4 with $2 trillion in assets.

The two GSEs are also extremely leveraged with Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) leveraged at 341.1 and a leverage capital ratio of a risible 0.29%, while Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) has leverage ratio of 153:1 and a leverage capital of an almost as risible 0.65%.

Recently, PIMCO’s CEO Douglas Hodge highlighted the huge size of the two GSEs. He pointed out that today 99% of all Mortgage Backed Securities are backed by these two GSEs and if President Obama plans to wind down the GSEs, there will be a problem as there will not be much appetite from institutions like PIMCO for MBS not backed by the two GSEs.

Alex J. Pollock points out over $5 trillion of the obligations of these hyper-leveraged institutions are widely held throughout the U.S. financial system and around the world by banks, central banks, other official bodies and many other investors. He is surprised at FSB not designating the two GSEs as G-SIFIs.

Existing-Home Sales Remain Soft in March Says NAR

WASHINGTON, DC–(Marketwired – Apr 22, 2014) – Existing-home sales were essentially flat in March, while the growth in home prices moderated, according to the National Association of Realtors®. Sales gains in the Northeast and Midwest were offset by declines in the West and South.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 0.2 percent to a seasonally adjusted annual rate of 4.59 million in March from 4.60 million in February, and are 7.5 percent below the 4.96 million-unit pace in March 2013. Last month’s sales volume remained the slowest since July 2012, when it was 4.59 million.

Lawrence Yun, NAR chief economist, said that current sales activity is underperforming by historical standards. “There really should be stronger levels of home sales given our population growth,” he said. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”

Yun expects some improvement in the months ahead. “With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly.”

The median existing-home price2 for all housing types in March was $198,500, up 7.9 percent from March 2013. Distressed homes3 — foreclosures and short sales — accounted for 14 percent of March sales, down from 16 percent in February and 21 percent in March 2013. “With rising home equity, we expect distressed homes to decline to a single-digit market share later this year,” Yun said.

Ten percent of March sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in March, while short sales were discounted 12 percent.

Total housing inventory4 at the end of March rose 4.7 percent to 1.99 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 5.0 months in February. Unsold inventory is 3.1 percent above a year ago, when there was a 4.7-month supply.

The median time on market for all homes was 55 days in March, down from 62 days in February, and also 62 days on market in March 2013. Short sales were on the market for a median of 112 days in March, while foreclosures typically sold in 55 days and non-distressed homes took 53 days. Thirty-seven percent of homes sold in March were on the market for less than a month.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.34 percent in March from 4.30 percent in February; the rate was 3.57 percent in March 2013.

First-time buyers accounted for 30 percent of purchases in March, up from 28 percent in February; they were 30 percent in March 2013.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said first-time buyers have been stuck in a rut. “There are indications that the stringent mortgage underwriting standards are beginning to ease a bit, particularly regarding credit score requirements, but they remain a headwind for entry-level and single-income home buyers,” he said.

“We also have tight inventory in the lower price ranges where many starter homes are found, but rising new-home construction means some owners will be trading up and more existing homes will be added to the inventory. Hopefully, this will create more opportunities for first-time buyers,” Brown said.

All-cash sales comprised 33 percent of transactions in March, compared with 35 percent in February and 30 percent in March 2013. Individual investors, who account for many cash sales, purchased 17 percent of homes in March, down from 21 percent in February and 19 percent in March 2013. Seventy-one percent of investors paid cash in March.

Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.04 million in March, the same as February, but are 7.3 percent below the 4.36 million pace a year ago. The median existing single-family home price was $198,200 in March, which is 7.4 percent above March 2013.

Existing condominium and co-op sales declined 1.8 percent to an annual rate of 550,000 units in March from 560,000 in February, and are 8.3 percent below the 600,000 level in March 2013. The median existing condo price was $200,800 in March, up 11.6 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 9.1 percent to an annual rate of 600,000 in March, but are 4.8 percent below March 2013. The median price in the Northeast was $244,700, up 3.2 percent from a year ago.

Existing-home sales in the Midwest rose 4.0 percent in March to a pace of 1.04 million, but are 10.3 percent below a year ago. The median price in the Midwest was $149,600, which is 5.9 percent above March 2013.

In the South, existing-home sales declined 3.0 percent to an annual level of 1.92 million in March, and also are 3.0 percent below March 2013. The median price in the South was $173,000, up 6.7 percent from a year ago.

Existing-home sales in the West fell 3.7 percent to a pace of 1.03 million in March, and are 13.4 percent below a year ago. The median price in the West was $289,300, which is 12.6 percent higher than March 2013.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to a seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

Realtor.com®, NAR’s listing site, posts metro area median listing price and inventory data at: www.realtor.com/data-portal/Real-Estate-Statistics.aspx.

The Pending Home Sales Index for March will be released April 28, and existing-home sales for April is scheduled for May 22. First quarter metropolitan area home prices will be published May 12; all release times are 10:00 a.m. EDT.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.

Ahead of the Bell: US Existing Home Sales

WASHINGTON (AP) — The National Association of Realtors reports on sales of existing homes in March. The report is scheduled for release Tuesday at 10 a.m. Eastern time.

SLIGHT DROP, AGAIN: Economists forecast that sales slipped 0.7 percent last month to a seasonally adjusted annual rate of 4.57 million, according to a survey by FactSet. If that projection proves accurate, it would be slowest sales pace in 21 months.

NO SPRING THAW YET: Harsh winter weather, a limited supply of available homes and rising mortgage rates have dragged down sales since last summer.

Last month’s figures reflect final sales that likely began with offers in January or February, since it can take a month or more to close a sale. So March’s sales data may be affected by freezing temperatures and snowstorms that slammed the Northeast and Midwest earlier this year.

Signed contracts to buy homes fell for the eighth straight month in February, the Realtors said last month. Signed contracts are usually followed in one to two months by a completed sale, so February’s drop points to falling sales last month. If so, it would be the seventh decline in the past eight months.

Existing home sales rose steadily in the first half of last year, reaching an annual pace of 5.38 million in July. And sales totaled 5.1 million in all of 2013, the most in seven years. That’s still below the 5.5 million that is consistent with a healthy housing market.

But sales slowed in the fall as rising mortgage rates and higher home prices began to squeeze some buyers out of the market. Freezing temperatures and winter storms also kept prospective buyers away from open houses. Sales have fallen 14 percent since July.

HIGHER BUYING COSTS: Home prices are rising even as sales slow. That’s a sign that the supply of available homes is tight, forcing potential buyers to make higher bids. Prices rose 12.2 percent nationwide in February compared with the same month a year ago, according to real estate data provider CoreLogic.

The average interest rate on a 30-year mortgage was 4.27 percent last week, according to mortgage buyer Freddie Mac. That was down from 4.34 percent the previous week. But that’s still about a full percentage point higher than last spring’s record lows.

March Sales of Existing Homes Slip Again

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in March fell 0.2% to 4.58 million from a total of 4.6 million in February. Sales are also down 7.5% year-over-year for the month. March activity was the lowest since July 2012, when the seasonally adjusted annual rate was 4.59 million.

The consensus estimate called for sales to reach 4.6 million, according to a survey of economists polled by Bloomberg.

Housing inventory rose 4.7% in March, to 1.99 million homes, which is equal to a supply of 5.2 months, higher than the five-month supply in February. Unsold inventory is up 3.1% compared with March 2013, when there was a supply of 4.7 months.

ALSO READ: Cities Where Americans Don’t Feel Safe

According to the NAR, the national median existing home price in January was $198,500, up 7.9% compared with March 2013.

NAR’s chief economist said:

There really should be stronger levels of home sales given our population growth. In contrast, price growth is rising faster than historical norms because of inventory shortages. With ongoing job creation and some weather delayed shopping activity, home sales should pick up, especially if inventory continues to improve and mortgage interest rates rise only modestly.

Sales of single-family homes remained unchanged from February at a seasonally adjusted annual rate of 4.04 million, down from 4.05 million in January and 7.3% below sales in March a year ago. Sales of multifamily homes fell 1.8% month-over-month to an annual rate of 550,000.

Foreclosed and short sales accounted for 14% of March sales. Foreclosures sold at an average 18% discount to the March median price, while short sales sold at a discount of 12%.

Existing, non-distressed homes were on the market for an average of 53 days, while foreclosed homes were on the market for an average of 55 days and short sales took a median of 112 days to sell.

The good news from the NAR’s report remains that housing inventory continues to rise year-over-year, even though it is still low by historical standards.

Related Articles

Fannie Mae Multifamily Provides Consistent MBS Issuance In Q1

In the first quarter of this year, Fannie Mae issued approximately $3.5 billion of multifamily mortgage-backed securities (MBS), backed by new multifamily loans delivered by its lenders, according to the government-sponsored enterprise (GSE).

Fannie Mae also re-securitized $3.3 billion of Delegated Underwriting and Servicing (DUS) MBS through its Guaranteed Multifamily Structures (GeMSTM) program in the first quarter. This issuance volume is composed of three Fannie Mae GeMS real estate mortgage investment conduit transactions. Total GeMS issuance volumes in the first quarter of 2012 and 2013 were $2.6 billion and $3.2 billion, respectively.

The company says its DUS MBS securities provide market participants with highly predictable cash flows and call protection in defined maturities of five, seven and 10 years, and the GeMS program consists of structured multifamily securities created from collateral specifically selected by Fannie Mae Capital Markets.

Fannie Mae Capital Markets sold approximately $3.9 billion of Fannie Mae multifamily mortgage securities from its portfolio in the first quarter of this year, the GSE reports.

Fannie Mae HomePath Mortgage : Low Downpayment, No Appraisal Needed …

Fannie Mae HomePath Mortgage program offer attractive rates and financing for buyers of foreclosed homes

Since 2006, home buyers have flocked to foreclosed homes as an inexpensive way to purchase property. Even today, foreclosures remain popular among all buyer types including first-time home buyers, move-up buyers, and real estate investors, as well.

To help match foreclosed homes with buyers who want them, then, Fannie Mae offers a special program called HomePath. HomePath is a brand name and refers to foreclosed homes sold by Fannie Mae directly.

Fannie Mae HomePath is available in all 50 states.

Click here to see today’s mortgage rates.

What Is The Fannie Mae HomePath Mortgage?

The Fannie Mae HomePath program first launched in early-2009 as a way to help Fannie Mae sell homes it had reclaimed via foreclosure.

The agency is not designed to “manage properties” so the HomePath program was created to unload the thousands of homes which Fannie Mae had repossessed. The HomePath program lets buyers buy Fannie Mae-owned homes with simpler mortgage requirements than with a traditional loan.

There are two distinct programs available via HomePath.

The first program is called the HomePath Mortgage. The Home Path Mortgage resembles a traditional home loan you might find from a bank.

The standard HomePath mortgage is meant for buyers who are purchasing the foreclosed property to be their primary residence; and for homes which are generally move-in ready.

The second HomePath program is called the HomePath Renovation Mortgage.

The HomePath Renovation Mortgage is aimed at buyers buying a home in need of heavier work or repair; and, real estate investors doing fix-and-flip, for example.

Via HomePath Renovation, a foreclosure buyer can purchase a home and simultaneously borrow the lesser of either 35% of the home’s value-after-repairs, or $35,000. The purchase and renovation loans close simultaneously, which reduces borrower closing costs.

Click here to get a HomePath mortgage rate quote.

The Benefits Of A HomePath Mortgage

For buyers of foreclosed homes, the Fannie Mae HomePath loan boats several distinct advantages over other financing types.

As one example, via HomePath, lenders require just 5% down on a purchase for buyers who are purchasing a home to use as a primary residence. For investors, the minimum downpayment is just 10 percent.

These downpayment requirements are in-line with Fannie Mae’s other, non-HomePath loan programs but with one major exception — via HomePath, private mortgage insurance (PMI) is not required.

There is no PMI ever on a Fannie Mae HomePath loan.

Other unique traits of the Home Path program include :

  • Home appraisals are not required
  • Less-than-perfect credit is allowed — even below 660
  • Buyers can accept up to 6% seller concessions to offset total closing costs

Furthermore, downpayments on a HomePath Mortgage can be gifted from a family member; or, made via a grant or loan from a non-profit organization, state or local government, or employer.

As an added bonus to buyers, Fannie Mae offers a “First Look” marketing program to buyers who plan to buy a foreclosed home to make it their primary residence. Designed  to promote homeownership and neighborhood stabilization, First Look makes properties available to primary home buyers 20 days prior to real estate investors.

First Look gives primary home buyers an opportunity to buy HomePath-eligible homes without the pressure of bidding against bona fide investors.

Click here to see today’s mortgage rates.

Am I Eligible for a HomePath Mortgage?

As with all mortgage loans, the HomePath Mortgage requires borrowers to meet qualification standards known as “mortgage guidelines”.

For example, in order to qualify for the HomePath Mortgage, your lender will verify your income via W-2s and tax returns; your assets via bank statements; and, your credit scores via an official credit report.

Subject properties must also be marked as Fannie Mae HomePath-eligible. Your real estate agent can help you to locate participating properties.

Condominium can be non-warrantable via the HomePath Mortgage program but lenders will require the project to carry minimum insurance to protect against loss.

Interest-only mortgages are not allowed via HomePath and not all lenders will offer the HomePath Renovation Mortgage option. If at first your loan is declined, consider re-applying with a different mortgage lender.

Compare Today’s Live Mortgage Rates

For today’s buyers of foreclosed properties, consider the Fannie Mae HomePath program. Mortgage rates are low, program terms are generous, and there are thousands of eligible homes nationwide.

Get an instant mortgage rate online. Rates are available at no cost, with no obligation to proceed, and with no social security number required to get started.

Click here for mortgage rates today.