McLean, Va.-based Freddie Mac (FRE) cut its origination forecast for Q309 from $890bn in June to $625bn in July. In addition, the government-sponsored enterprise (GSE) lowered its refinancing shares forecasts. Its June 8 report predicted 70% of applications and 74% of originations would be for refinanced mortgages. In the July 8 report, those figures were reduced to 55% and 59%, respectively. June’s monthly report predicted 71% of Q209 applications and 75% of originated loans would be for refinanced mortgages. In the July report, those figures were reduced to 65% of applications and 69% of originations. The new, lower Q309 forecasts, along with lower Q409 forecasts, makes Freddie Mac’s new annual origination forecast $2.3trn, down nearly 15% from the June forecast of $2.7trn. The news comes just weeks after the Mortgage Bankers Association reduced its origination projection $700bn to $2.03trn. Freddie Mac’s total mortgage portfolio decreased 1.6% in May, due in part to a 7% decrease in refinance-loan purchases from April to May. Recent action by the Department of Housing and Urban Development (HUD), however, may potentially increase Freddie’s refinancing efforts. The Home Affordable Refinance Program (HARP), which originally allowed borrowers with mortgages owned by Freddie or sister GSE Fannie Mae (FNM) and worth up to 105% of the home’s current value, was off to a slow start. In response, HUD recently increased the program’s loan-to-value limit from 105% to 125% to allow more homeowners to take advantage of the program. Write to Austin Kilgore. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.

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