Fannie Mae Mortgage Portfolio Passes $800bn in May, Cleared to Fund More ‘Dead Assets’
The Fannie Mae (FNM) mortgage portfolio passed $813bn in May, climbing $24bn from April, according to its monthly summary. In his market report, Jim Vogel of FTN Financial is increasing expectations of how much debt Fannie will issue to fund more “dead assets.” Fannie could issue more debt paid back to investors at scheduled times and at the investors discretion, also known callable debt. The growth shown in May was financed mostly by this short-term borrowing, according to Vogel. “Fanie will have clear sailing for is next Benchmark on Wednesday, July 7 with no Treasury supply and limited corporate competition in front of earnings announcements,” Vogel wrote. He added another $5bn in issuance “is certainly possible.” Fannie issued $36.2bn mortgage-backed securities (MBS) in May, a 3.7% drop from the $37.8bn mark in April and a 71.9% decrease from the $129bn issued in May 2009. MBS issuances reached its peak in the last year in June 2009, when Fannie issued more than $130bn in MBS. The serious delinquency rate in Fannie Mae’s portfolio fell for the second straight month to 5.3% in April, the latest month of available data. It reached its peak in January 2010 at 5.52%. In April 2009, the delinquency rate was 3.42%. In May, Fannie purchased another $49bn of loans out of MBS trusts as part of its effort to buy-out seriously delinquent pipelines. That’s up from $46bn in April. Write to Jon Prior.