Freddie Bullish on Residential Production

Freddie Mac believes single-family originations will fall by just 10% this year to $1.75 trillion — a decent year for a recovering industry and a forecast that is considerably higher than one made by the Mortgage Bankers Association. Earlier in the week MBA estimated that 2010 loan production would be a meager $1.3 trillion. (According to figures compiled by National Mortgage News, the industry funded about $1.9 trillion for the year just ending.) Freddie believes that despite a heavy flow of foreclosures, the housing market will "weather the growth of distressed sales without further setbacks, though risks remain." If MBA's forecast comes true, that means fundings will fall by 32% this year from 2009. Unlike MBA, Freddie sees unemployment falling below 10% in the second half of this year. The industry's best year came in 2003 when $3.9 trillion in home mortgages were originated. It was that year that subprime originations (and securitizations) began to grow rapidly. Today, subprime originations are non-existent. (For a full analysis see the Monday edition of NMN.)