Fannie Mae’s Reverse Mortgage Portfolio Continues to Grow

image Fannie Mae’s reverse mortgage portfolio grew from $41.2 billion as of December 31, 2008 to $48.6 billion as of June 30, 2009 according to a recent SEC filing.  The $7.4 billion increase comes despite Fannie Mae’s decision to raise margins on the reverse mortgages it purchases.

According to the filing, the majority of the loans held are Home Equity Conversion Mortgages (“HECM”) which account for approximately 90% of the total market share of reverse mortgages.  Fannie Mae estimates that its market share was approximately 90% of the total market of reverse mortgages as of December 31, 2008.

The increase in their portfolio is evidence that despite the pricing changes, our industry still relies heavily on the government sponsored enterprise (GSE).  We should see its market share drop a bit towards year end due to more lenders turning to Ginnie Mae for its fixed rate pricing, but how much it will change remains to be seen.  

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Things are not all well at the GSE either.  It reported a loss of $14.8 billion, or ($2.67) per diluted share, in the second quarter of 2009, compared with a loss of $23.2 billion, or ($4.09) per diluted share, in the first quarter of 2009.  Fannie Mae said it needs a $10.7bn injection of cash from the Treasury Department to stay afloat after posting the $14.8 billion loss.

It’s the third time Fannie has been forced to go to Treasury for funds to stay in business, and brings the total amount of money loaned to the GSE under its preferred stock purchase with the Treasury to $45.9bn says HousingWire.

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  • This is not a positive situation. Our debt only grows which is not what Fannie Mae needs right now. What we need is for Congress to amend the HERA requirements and allow Fannie Mae to acquire HECMs without restriction. Right now with the mood in Congress this may be impossible to get.

    • Cynic,

      Why are only you and I the ones that commented on this? Well, I guess no wanted to join us. It seems our audience is getting smaller these days? Have a good weekend.

      John Smaldone

  • Cynic,

    I think you hit it on the head. If congress would open their eyes and ears and amend the HERA requirements, this could alleviate some major problems.

    GNMA entrance is helping but we need other investors back in the market place. I don't feel GNMA will be our long term solution. The mood of congress seems to always affect other priority issues due to their own priorities and agenda's, not that of the peoples true needs.

    John Smaldone

  • Cynic,rnrnWhy are only you and I the ones that commented on this? Well, I guess no wanted to join us. It seems our audience is getting smaller these days? Have a good weekend.rnrnJohn Smaldone

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