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Freddie Mac’s Mortgage Portfolio Sees More Contraction

FreddieHaving already fallen below the cap for 2016 only a third of the way through the year, Freddie Mac’s mortgage-related investments portfolio continued to shrink at the annual rate of 27 percent in May, according to Freddie Mac’s May 2016 Monthly Volume Summary.

The contraction for Freddie Mac’s mortgage-related investments portfolio amounted to a decline of about $7.5 billion over-the-month, down to a total of approximately $326 billion in unpaid principal balance (UPB). The UPB portfolio has declined by about $63 billion since May 2015, according to Freddie Mac.

In April, Freddie Mac’s portfolio shrank at a rate of 22 percent and fell below its 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.

Freddie Mac’s single-family refinance-loan purchase and guarantee volume for May was $16.8 billion, which represented 53 percent of total single-family mortgage portfolio purchases or issuances during the month. Relief refinance mortgages comprised about 7 percent of Freddie Mac’s total single-family refinance volume in May.

The serious delinquency rate on mortgages backed by Freddie Mac declined by another 4 basis points from April to May, down to 1.11 percent.

The number of loan modifications completed on Freddie Mac-backed loans totaled 3,286 in May, which brings the year-to-date total (as of May 31) up to 17,883, an average of 3,577 per month.

Freddie Mac reported a net loss of $354 million in the first quarter, which was its second quarterly loss in the last three. The reduction of the mortgage portfolio and the wind-down of the GSEs’ capital buffer, which is required to be reduced to zero by January 1, 2018, has resulted in more calls for GSE reform as the Obama Administration draws to a close.

Click here to view the complete monthly volume summary.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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