Fannie Mae (NYSE:FNM) saw its market share of reverse mortgage acquisitions fall from roughly 90% during the first quarter of 2009 to approximately 5% in the first quarter of 2010 according to its latest filing from the Securities and Exchange Commission (SEC).
“The decrease in our market share was a result of changes in our pricing strategy and market conditions,” said the Government Sponsored Entity (GSE) in the filing. “Because home equity conversion mortgages are insured by the federal government, we believe that we have limited exposure to losses on these loans, although home price declines and a weak housing market have also affected the performance of these loans.”
As investor interest in Ginnie Mae’s HMBS program continues to increase the industry’s reliance on Fannie Mae has dropped considerably. Each quarter the GSE’s market share of acquisitions continues to shrink, going from 20% during Q3 2009 to 10% during Q4 2009 and now approximately 5% during Q1 2010.
During the first three months of 2010, it purchased only $300 million of HECM production, bringing its reverse mortgage portfolio to $50.5 billion as of March 31, 2010.
Chart: FNMA Reverse Mortgage Portfolio Size
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The GSE said it lost $11.5 billion in the first three months of this year adn will seek $8.4 billion in aid from the U.S. Treasury Department after reporting an 11th-straight quarterly loss according to Bloomberg BusinessWeek. Fannie Mae had posted $136.8 billion in losses in the preceding 10 quarters, and the new aid request would bring its total draw from the Treasury to $84.6 billion since April 2009.
Former staffers from HUD, FHA and the GSEs weigh in on how to press ahead in this volatile reverse mortgage climate.