Fannie Mae, reporting its monthly volume summary for February last week, cited low commitments, a continued drop of its retained portfolio and a lackluster increase in MBS outstanding, which reflects Fannie's guarantee business. The disappointing results are partly offset by a low level of delinquencies and low interest rate risk measures.
The GSE's retained portfolio commitments rose to $12.6 billion in February from $11.6 billion the prior month. However, it remains low due to unfavorable MBS-to-debt spreads. JPMorgan Securities said that MBS-to-debt spreads have improved slightly with the bond market rally that started March 5. However, the rally was not enough to cause a considerable rise in commitments. Fannie Mae's purchase opportunities have been rather limited, as demand for mortgage assets by depository institutions stayed high and drove mortgage yields down, said researchers at Lehman Brothers.