Fannie Mae's April monthly numbers were characterized by strong growth in the guarantee business and slow-to-stable growth in retained portfolio commitments that were partly offset by weak retained portfolio growth, said a JPMorgan Securities report released recently.

JPMorgan said that retained portfolio growth was slow due to relatively unfavorable MBS-to-debt spreads. Also, there was a slowdown in settled outstanding commitments. The firm added that Fannie's retained portfolio would likely remain weak with dollar rolls continuing and liquidations still at high levels.

Fannie reported that its retained portfolio grew to $817.9 billion, which is a slow annualized rate of 2.8% vs. March. New commitments were slightly up, at $41.4 billion in April from $39.5 billion in March. However, outstanding commitments were down slightly to $72 billion at April 30, compared with $73 billion at March 31.

In contrast, Fannie's guarantee business (MBS outstanding) grew to $41.69 trillion, which is a very strong annualized rate of 35%. JPMorgan attributed this to three factors: a strong mortgage market, growth in market share and timing lag in the settlement of refinancings. The liquidation rate also rose to 50.8% of beginning balance in April from 45% in March. This figure will probably rise as refinancings settle. Fannie also reported that hybrid ARMs have risen as a proportion of total purchases.

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