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GSE market share increases in 1Q

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The government-sponsored enterprises’ market share of mortgage-backed securities rose in the first quarter although Ginnie Mae’s market presence fell, the Federal Housing Finance Agency said Friday. Mortgage originations dropped 35% to $325 billion in the first quarter, down from $500 billion in the first quarter with Fannie Mae, Freddie Mac and Ginne Mae accounting for 97% of MBS issuance, the FHFA said. Of that, Fannie or Freddie guaranteed 75% of all single-family mortgages securitized during that period.That's up from a low of 44% in 2006 during the height of the housing bubble. (Click on charts to expand.) This drop in originations is attributed partly to higher mortgage rates, FHFA said in its first-quarter conservator's financial report. Private-label issuers have not returned to the secondary mortgage market in any significance since mid-2007. The GSEs and Ginnie Mae continue to account for almost all MBS issuances. New deals getting to market in the first quarter involved mostly high-quality loans with borrower FICO scores higher than 750. Activity in the subprime segment remained anemic, as the GSEs continued buying higher quality mortgages. The average loan-to-value ratio remained at or below 70% at both Fannie and Freddie. The increase in the percentage of new business with LTVs greater than 90% primarily relates to the Home Affordable Refinance Program, according to the FHFA report. Serious delinquency rates remain high for the single-family credit guarantee portfolios, but these rates are trending down as delinquent loans are resolved through loss-mitigation activities or foreclosure. Nontraditional and higher-risk mortgages, which account for a relatively small portion of the credit guarantee portfolios, continue to show substantially higher serious delinquency rates than traditional mortgages. For Freddie Mac, interest-only loans accounted for 17.9% of seriously delinquent loans while Alt-A loans accounted for 11.9%. Alt-A loans were 13.5% seriously delinquent at Fannie with 17.1% of interest-only loans  seriously delinquent there, according to the report. Treasury Department support for the GSEs in first quarter one totaled $8.5 billion, all of which was allocated to Fannie. Last year, the GSEs projected they would draw somewhere between $33 billion to $70 billion from the Treasury for the second half of 2010 and the first quarter of 2011. In reality, the GSEs drew much less, taking only $14 billion from the Treasury during both periods due to fewer than expected nonperforming loans and mortgage defaults. Write to: Kerri Panchuk.

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