Page 40 - May-June 2018 GSE Report Flip Book

FANNIE MAE AND FREDDIE MAC 41%
MAJAYN-UAJRUYNE20210818
52%
58%
59%
65%
2013
CRT indexes and the emergence of CRT issuance by banks, should they get
capital relief.
2014 2015 2016 2017
Source: December 2017 Federal Housing Finance Agency single-family credit risk transfer progress report. BREAKDOWN OF THE 2017 GSE SINGLE-FAMILY BOOK
OF BUSINESS
Exhibit 4: Breakdown of the 2017 GSE Single-Family Book of Business
Source: Urban Institute calculations from eMBS data.
Note: ARM = adjustable-rate mortgage; CRT = credit risk transfer; GSE = government-sponsored enterprise; HARP = Home Affordable Refinance Program; LTV = loan-to-value ratio.
CRT
HARP
ARM
Other exclusions
Fixed LTV < 60, term > 20 year Fixed 15-year
Other fixed ≤ 20 year
5.1% 12.4%
10.2%
3.9% 2.7%
0.7%
65.0%
With the GSEs laying off the overwhelming majority of their risk on 30-year collateral with LTV ratios greater than 60 percent, most of what is not being used is low risk,
The white paper is available here. (Credit Risk Transfer: A Fork in the Road, Laurie Goodman, June 2018)
either because the term is shorter than 30 years or because the LTV ratios are less than 60 percent.
The cost of originating a mortgage loan hits an all-time high in the first quarter
In the CAS and STACR structures, the GSEs are buying protection against the first 4 percent of losses for deals with LTV ratios between 60.01 and 80 percent and the first 4.25
“In the first quarter of 2018, falling volume drove net production profitability into the red for only the second time since the inception of our report in the third quarter of 2008,” said Marina Walsh, MBA VP of industry analysis. “While production revenues per loan actually increased in the first quarter, wealsoreachedaall-timehighfortotalproduction7expensesat$8,957perloan[upfrom$8,475], as volume dropped.” On average, independent mortgage banks and mortgage subsidiaries of commercial banks reported a loss of $118 per loan originated in the first quarter of 2018—down from a profit of $237 per loan in the first quarter. (HousingWire, Kelsey Ramirez, 06/07/18)
Mortgage lenders reported a net negative profit margin outlook for the seventh consecutive quarter, as rising home prices and tight housing supply continue to put a squeeze on mortgage demand, according to Fannie Mae’s Q2 2018 Mortgage Lender Sentiment Survey®. “Lenders remain bearish this quarter as they continue to face headwinds from rising mortgage rates, tight
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