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The Growth is Gone: Freddie Mac’s Portfolio Rate Drops

Freddie Mac BHFreddie Mac [1]’s annualized rate for mortgage-related investments portfolio in November contracted 21.2 percent, a stark contrast from the rare growth of 4.7 percent last month. Fannie Mae is set to release its November statement later this month.

This contraction in annualized growth rate dropped the aggregate unpaid principal balance of the portfolio to $303.9 billion as of the end of November. This balance is over $30 billion lower than the 2016 cap of $339.3 billion, which is the amount the portfolio must reach by the end of the year as part of its required reduction.

The value of Freddie Mac’s mortgage-related investments portfolio has declined by approximately $41 billion since November 2015, when the aggregate UPB of the portfolio sat at $344.9 billion. For the past 11 months of 2016, the portfolio has contracted at an average rate of 13.5 percent and has contracted in all but three of the last 14 months (December 2015, January 2016, and October 2016).

Freddie Mac’s single-family refinance-loan purchase and guarantee volume for October was $24.6 billion, which represented 62 percent of total single-family mortgage portfolio purchases or issuances during the month. Relief refinance mortgages comprised approximately 4 percent of Freddie Mac’s total single-family refinance volume. The serious delinquency rate on mortgages backed by Freddie Mac remained stagnant at month-over-month 1.03 percent.

The number of loan modifications completed on Freddie Mac-backed loans totaled 4,177, which brings the year-to-date total (as of November 30) up to 39,519.

Freddie Mac reported a net income of $2.3 billion in the third quarter, which was an increase from the $1 billion net income seen in Q2. The reduction of the mortgage portfolio and the wind-down of the GSEs’ capital buffer, which is required to be at zero by January 1, 2018, is likely to result in more calls for GSE reform as the Trump Administration takes the helm in January.

To view the full Monthly Volume Summary, click HERE. [2]