Freddie Mac's retained portfolio declined an annualized 12.5% or $7.4 billion in October to $702.9 billion.
Year-to-date, the portfolio has shrunk 8.3% to $52.4 billion. The GSE remains well below the 2010
portfolio cap of $810 billion.
The contraction resulted primarily from declines in FHLMC Gold securities totaling $7.4 billion, while non-FHLMC Gold securities and mortgage loan holdings essentially netted out or remained the same.
Other details included in Freddie's monthly volume summary are highlighted below:
Retained net purchases totaled positive $3.9 billion, which increased from $1.9 billion in September.
The agency said its refinance-loan purchase and guaranty volume was $33.1 billion, which is similar to the previous month.
Total FHLMC MBS issuance was $38.4 billion. After liquidations, issuance was negative $12 billion.
Freddie Mac reported negative annualized growth of 6.6% in the total mortgage portfolio. Year-to-date, the portfolio has shrunk 3.8%.
Total single-family delinquencies increased two basis points to 382 basis points in October.
The total unpaid principal balance of four month or more delinquent loans was unchanged at $4.3 billion.
In the 2007 30-year vintages, 120 plus day delinquencies in the 6% coupon decreased a basis point to 0.65%, while 5.5s slipped two basis points and 6.5s increased a basis point to 0.49% and 0.89%, respectively.
In the 90-day category, delinquencies increased three basis points in 5.5s to 0.73%, while 6s remained unchanged at 0.96% and 6.5s were a basis point higher to 1.34%.
Rise in Delivery Fees
Late yesterday, Freddie Mac also announced that effective March 1, 2011, it will be increasing delivery fees on certain FICO and LTV combinations of between 25 basis points and 50 basis points, and is either adding a new delivery fee or increasing other rates for mortgages with secondary financing with certain FICO and LTVs (Bulletin Number: 2010-30).
In other words, fees are increased for worse credits, and possibly will further impact many borrowers' ability to refinance.
"These fee increases should be supportive for up-in-coupon," BNP Paribas analysts said in a report. Expectations are that Fannie Mae will revise its loan level price adjustments (LLPAs) soon.
"While these higher fees represent a further tightening of lending standards, I think that the impact may be minimal," said Scott Buchta, managing director and the head of investment strategy at Braver Stern Securities.
He said that originators have already cut back on originating many of these higher-risk loans as a result of put-back fears.
Many of these loans have been made under the Federal Housing Administration programs instead, which marks a migration that started when Fannie Mae and Freddie Mac first introduced credit-based LLPA fees, he said.
In January 2008, the average FICO score of a newly issued FHLMC Gold/FNMA pool was roughly 720 versus 765 today, according to Buchta.
An interesting fee increase, he said, is the 25 basis point fee for over 75 LTV loans of over 740 FICO borrowers.
For 720 to 740 FICO borrowers, the fee is 50 basis points, while it is 100 basis points for 700 to 720 FICO loans.
Buchta noted that each 25 basis point of fee would roughly mean an increase of five basis points, Freddie Mac said. This makes 75 the new 80 in terms of LTVs are. It might also add 10 basis points to 20 basis points to the refinancing elbow for some seasoned Freddie Mac borrowers wanting to refinance.
This memo does not mention the Home Affordable Foreclosure Alternatives Program (HARP). However, Buchta assumed that loans refinanced under the this program would continue to see their delivery fees capped at 200 basis points.
HARP is scheduled to expire on June 30, 2011 after receiving a year's extension in March, he noted.