Despite a 35% decline in overall residential fundings in the first quarter, Fannie Mae and Freddie Mac continued to purchase refinanced, high loan-to-value loans at a decent clip under the Home Affordable Refinance Program.
The Federal Housing Finance Agency reported that the GSEs refinanced 139,200 borrowers with LTV ratios greater than 80% and up to 125% during the first quarter, down only 8% from 4Q.
But the two secondary market giants shined when it came to refinancing underwater loans. According to FHFA’s quarterly GSE performance report, refinancings of underwater borrowers (LTVs greater than 105% and up to 125%) jumped by more than 50%.
Fannie and Freddie refinanced nearly 16,900 of underwater GSE-guaranteed loans in the first quarter, compared to 10,750 units in 4Q.
Freddie refinanced roughly 10,750 of these high LTV loans, while, Fannie refinanced 6,150.
Overall, the GSEs refinanced 1.02 million loans in 1Q, down from 1.37 million in the prior quarter.
In a new securities filing, Freddie reported that refinancings comprised approximately 85% of the loans it purchased for its single-family credit guarantee portfolio in 1Q. Fannie said approximately 82% of its purchases involved refinanced mortgages. Less than 20% of their guarantee business involved purchase money loans granted to actual home buyers.
