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.
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.