There has been some confusion over first-quarter figures at Fannie Mae, Freddie Mac and the Federal Housing Administration. But one thing is indisputable: the mortgage market is still on government life support.
At a Mortgage Bankers Association conference on Monday in New York, FHA Commissioner David Stevens caused a stir by saying his agency insured more loans than Fannie and Freddie purchased during the first quarter, "a shocking statement." He cited Washington consulting firm Potomac Partners for the data.
Stevens went on to say that "having FHA do this much volume … is a sign of a very sick market," one that he doesn't anticipate improving anytime soon. Several media outlets, including ASR's sister publication, American Banker, published the finding.
Later in the day, the government-sponsored enterprises' conservator, the Federal Housing Finance Agency, countered the claim. Fannie purchased $24.9 billion of single-family mortgages during the period ended March 31, while Freddie purchased $18.7 billion of loans, for a total of $43.6 billion, said FHFA spokeswoman Corinne Russell. According to FHA's website, the agency insured $42.8 billion of single-family loans in the first three months of 2010.
But the FHA's fiscal year is from October through September. In its fiscal first quarter, or the final three months of 2009, the FHA insured $51.9 billion of single-family mortgages.
Still, Brian Chappelle, of Potomac Partners, later admitted in an e-mail he made "an arithmetic mistake" in his FHA number. The discrepancy reflects that the average loan the FHA insures is about $175,000, whereas the average loan purchased by Fannie and Freddie is around $215,000 to $220,000, Chappelle said.
In any event, Chappelle said, why split hairs over dollar volume? The point is that FHA's market share has grown considerably in the past few years. "It is remarkable that as recently as 2006, the GSEs were doing 20 times the total business of FHA," he said.
The confusion didn't end there. When asked by American Banker to confirm which study Stevens was citing, the FHA said it was one produced by Campbell Communications — which said the agency was mistaken and that Potomac was indeed Stevens' source.
According to figures that will be published next week in National Mortgage News, the Government National Mortgage Association (which securitizes loans insured by FHA and other federal agencies) had a 23% market share in the first quarter, against 25% for Freddie and 50% for Fannie. The GSEs' shares reflect loan purchases from seller/servicers, not mortgage-backed security issuance.