Fannie Mae intends to securitize $256 billion of single family loans and $108 billion of multifamily loans to safeguard against major market interruptions and as part of the Liquidity Contingency Plan.

Securitizing its portfolio loans will help the GSE to manage through “a liquidity crisis or significant market disruption” by successfully selling these securities or using them as collateral to borrow against.

According to Fannie Mae first quarter 10-Q filing released May 8, the agency stated that its encumbered mortgage portfolio also has whole loans that it could possibly securitize that could be sold and used as collateral in repurchase or other lending arrangements or probably utilized as collateral for loans under its Treasury credit facility.

FTN Financial analysts noted that overall FNMA fixed MBS gross new issuance reached $128.4 billion, which was the biggest individual month of issuance on record. However, just $70.2 billion of overall FNMA fixed MBS issuance was originated in either 2008 or 2009.

Gross new issuance of FNMA 30-year MBS totaled $101.6 billion and just $49.4 billion of that new issuance was originated in either 2008 or 2009. The portfolio loan securitization program is concentrated in ‘03 vintage 5s and 5.5s with issuance of $22.5 billion.

FTN analysts do not expect Fannie Mae to immediately sell the newly securitized loans as it would be counter-productive to the Federal initiative to maintain low mortgage rates.


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