Secondary markets

Fannie Mae and Freddie Mac transferred a substantial amount of credit risk to the private sector through both single-family and multifamily market transactions in the first half of the year, with activity expected to rise in 2019, according to the Federal Housing Finance Agency.

Freddie Mac produced modest second-quarter results, reflecting a stabilizing business that CEO Donald Layton compared to a utility company.

Fannie Mae and Freddie Mac enjoy considerable advantages because of their lower cost of capital and significant government subsidies. But with some conforming loans, the private market is finding a way to compete.

Commercial and multifamily mortgage debt outstanding grew $44.3 billion during the first three months of 2018, the largest first-quarter gain since before the Great Recession, according to the Mortgage Bankers Association.

JPMorgan Chase has largely sat on the sidelines of Federal Housing Administration lending due to compliance concerns. But recent regulatory relief efforts have Chase Home Mortgage CEO Mike Weinbach eyeing an opportunity to jump back in.

Test your knowledge of the secondary mortgage market with this quiz of key industry abbreviations.

Fannie Mae's first-quarter profits were enough for it to rebuild its minimum capital buffer and pay the Treasury Department dividend after being forced to take a draw during the previous fiscal period.

If Freddie Mac's credit-risk transfer activities continue to grow, mortgage lenders could eventually see a reduction in the guarantee fees they pay to the government-sponsored enterprise, according to CEO Donald Layton.

The future secondary mortgage market entities will receive high investment grade ratings, even as there is no clarity on their scope or form, Fitch Ratings said.

As inflation fears put upward pressure on 10-year Treasury bonds and mortgage rates nationally, borrowers could start to take more notice of what lenders are charging them locally.