Freddie Touts Rising MBS Market Share

The pricing of Freddie Mac participation certificates has "strengthened" and the company is optimistic that it can recapture most of its traditional share of the mortgage-backed securities market this year."Market share has improved significantly since 2003," chief operating officer Paul Peterson told investors during a conference call on the release of Freddie's 2003 earnings. "The current full-year outlook is expected to be just short of historical levels." In early 2003, Bank of America announced that it would no longer sell a majority of its loan production to Freddie Mac, which reduced its issuance of PCs. In addition, rapid prepayments on its PCs forced the secondary-market agency to step into the market and prop up the pricing of its newly issued PCs or mortgage-backed securities. As a result, Freddie's PC issuance declined relative to Fannie Mae's MBS issuance. This year, Mr. Peterson says he expects the PC portfolio to grow 7%-9%. "While continued progress will be challenging, we remain committed to returning market share to historical levels," the COO said. "We also remain focused on maintaining the performance of our MBS."