Fannie Mae Releases Preliminary Delinquent Loan Figures

Fannie Mae has set a timetable and released preliminary figures that show tens of billions of dollars worth of unpaid principal balance are involved in its accounting-driven plan for increased purchases of certain delinquent loans from mortgage-backed securities pools. Fannie said the purchases will begin in March with the first ones reflected in MBS pool factors released on the fourth business day in April. "We expect to purchase a significant portion of the current delinquent population within a few-month period, subject to market, servicer capacity and other constraints," Fannie said. The government-sponsored enterprise said that as of Dec. 31, 2009 the total volume of loans delinquent by four or more months — which single-family MBS trust documents allow Fannie to buy out of pools — was about $127 billion. Of this amount, roughly $82 billion worth is backed by outstanding 30-year amortizing fixed-rate MBS. Other types of MBS comprise the rest. A division of the $82 billion by vintage shows the largest percentage of UPB — almost twice that of any other year or the pre-2004 period — is found in 2007 (approximately $30.70 billion). The UPB from the 2006 vintage is about $16.75 billion, for 2008 it is roughly $13.75 billion, for the pre-2004 period it is approximately $10.35 billion, for 2005 it is about $9.36 billion, and for 2009 it is roughly $1.02 billion. Fannie said it would release additional information on the buyouts "within the next two weeks." The buyouts are due to new accounting standards that result in the cost of purchasing most delinquent loans from MBS and holding them in portfolio to be less than the cost of advancing delinquent payments to security holders, according to Fannie. The accounting rules have been in effect since Jan. 1 and Wall Street researchers have been anticipating related increases in government-sponsored enterprise buyouts.