Fannie Mae’s gross mortgage portfolio resumed its contraction in February following a rare month of expansion in January, according to the GSE’sMonthly Volume Summary for February 2016released on Wednesday.
The portfolio contracted at an annual rate of 27.8 percent in February, which translated to a month-over-month decline of more than $11 billion down to a value of about $337.2 billion by the end of the month.
In January, Fannie Mae’s gross mortgage portfolio experienced a rare expansion, increasing at an annual rate of 5 percent. With February’s contraction, the portfolio has now contracted in all but four months out of the last 67 months (since June 2010). The four months in which the portfolio expanded were January 2016, March 2015, January 2015, and December 2012. At the beginning of that stretch in June 2010, the amount of unpaid principal balance (UPB) of the loans in the portfolio was $818 billion.
According to a report from Urban Institute released last week which examined the GSE portfolio wind down under the FHFA’s conservatorship, the fact that Fannie Mae’s portfolio expanded in January “should not be an issue as the GSEs are reasonably close to the year-end 2016 portfolio goal. Relative to January 2015, Fannie Mae contracted by 16.4 percent, and Freddie Mac by 14.2 percent. They are shrinking their less liquid assets (mortgage loans and non-agency MBS) at close to the same pace that they are shrinking their entire portfolios.”
Fannie Mae’s gross mortgage portfolio contracted at an annualized rate of 16.5 percent for the full year of 2015 and is back on that pace for 2016 following February’s contraction. For the first two months of 2016, the portfolio has contracted at an annualized rate of 13 percent and the aggregate UPB of the portfolio at the end of February ($337.2 billion) was below the 2016 cap of $339.3 billion.
Fannie Mae’s total book of business, which includes the gross mortgage portfolio plus total Fannie Mae mortgage-backed securities and other guarantees minus Fannie Mae MBS in the portfolio, increased at a compound annualized rate of 0.4 percent in February up to a value of about $3.098 trillion, according to Fannie Mae.
The serious delinquency rate on single-family loans backed by Fannie Mae declined by three basis points from January to February, from 1.55 percent down to 1.52 percent, its lowest level since July 2008. The number of loan modifications completed by Fannie Mae was nearly unchanged from January to February at 6,592 (compared to 6,599). For 2014, the monthly average of loan mods completed was 10,235. For 2015, the monthly average declined to 7,851.