GSEs, GNMA Experiencing a Slide in Market Share?


It appears that Fannie Mae and Freddie Mac are starting to see their market shares erode. The same might be said of the Government National Mortgage Association.

According to figures compiled by National Mortgage News, the three mortgage guarantors accounted for 84.54% of originations in the third quarter, compared to 91.75% in 2Q.

The shares are calculated by taking the loan acquisitions of Fannie/ Freddie — and GNMA MBS issuance — and dividing them by industry-wide loan originations in a given quarter.

But figuring out exact market shares can prove difficult. The GSEs publish their loan acquisitions monthly, but those purchases do not necessarily come from newly originated loans.

Sometimes, purchases can lag by several weeks or even months and might even involve the acquisition of delinquent loans out of existing MBS pools, distorting the share numbers. For instance, Fannie/Freddie/GNMA had a combined market share of 107% in the first quarter of 2011.

It’s no secret that Fannie and Freddie have been active buyers of delinquent loans, but in recent quarters those loan buys have been minimal.

Still, it’s possible that the GSEs are seeing their market shares fall because mortgage lenders are originating more jumbo loans – and keeping those loans in portfolio instead of selling them into the secondary market.

In the 3Q, for instance, mortgage bankers funded $26.6 billion of jumbo loans, a handsome 30% gain from the same period a year earlier. What makes the gain so impressive is that total industry-wide fundings fell 20% in 3Q compared to the third quarter of 2010. (For the full story see the weekly edition of NMN.)

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