Fannie Mae’s Gross Mortgage Portfolio Experiences Rare Monthly Expansion

Fannie Mae Gross Mortgage PortfolioFannie Mae‘s Book of Business decreased in January, but the GSE’s gross mortgage portfolio experienced a rare expansion, according to Fannie Mae’s January 2015 Monthly Volume Summary released Friday.

After dropping by almost $11 billion from November to December and declining in 53 of the last 54 months, Fannie Mae’s gross mortgage portfolio expanded in January at a compound annualized rate of 3.5 percent, from $413.3 billion up to $414.4 billion. It was the first time the portfolio expanded from month to month since December 2012 and only the second time since June 2010. At that time, the portfolio’s value was nearly $818 billion.

The Enterprise’s total Book of Business, which includes the gross mortgage portfolio plus the total Fannie Mae mortgage-backed securities and other guarantees less the Fannie Mae mortgage-backed securities in the portfolio, decreased at a compound annualized rate of 0.9 percent in January, down to $3.121 trillion. The Book of Business had expanded in three of the previous four months prior to January’s decrease. For the entire year 2014, the Book of Business contracted at a compound annualized rate of 1.3 percent.

The total value of Fannie Mae’s mortgage-backed securities and other guarantees for January was $2.802 trillion, which is a slight decline from January (a compound annualized rate of 0.3 percent). The end balance of mortgage-backed securities in the portfolio as of January 31, 2015, was $95.6 billion, an increase from $92.8 billion in December.

Fannie Mae’s single-family serious delinquency rate declined in January by three basis points down to 1.86 percent, marking the 38th consecutive month the rate has declined month-over-month by at least one basis point. The last time Fannie Mae’s single-family serious delinquency rate did not decline month-over-month was from October to November 2011, when it held steady at 4.0 percent. In January 2014, the rate was 2.33 percent.

Fannie Mae reported in its annual report released earlier this week that the single-family serious delinquency rate has declined every quarter since the first quarter of 2010, citing a number of reasons that include foreclosure alternatives, home retention solutions, completed foreclosures, improved loan payment performance, and acquisitions of loans with stronger credit profiles. According to Fannie Mae, loans acquired since 2009 (after the housing bubble burst) have stronger credit profiles – and those loans make up 81 percent of the loans in Fannie Mae’s portfolio.

The single-family serious delinquency rate for Fannie Mae in January was the same as that of its fellow GSE, Freddie Mac, which reported a rate of 1.86 in January – its lowest rate in nine years.

Meanwhile, Fannie Mae completed 8,746 loan modifications in January, down slightly from the 8,951 loan mods the Enterprise completed in December. For the full year of 2014, Fannie Mae completed 122,823 loan mods, an average of 10,235 per month.

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