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AGENCY REVIEW A LOOK AT THE GSES' LATEST DELINQUENCY NUMBERS AND TOP HEADLINES 5.59% fannie single family freddie single family 5.07% March 2013 fannie » 3.02% freddie » 3.03% 4.55% 4.03% 3.51% 3.00% 2.48% note: Delinquent loans reported here include all single-family loans 90 or more days past due as a percentage of portfolio size. Historical data covers a moving 12-month period. Source: Fannie Mae March 2013 Monthly Summary and Freddie Mac March 2013 Monthly Volume Summary. 1.96% 1.44% 0.92% 0.40% /13 /13 03 02 /12 /13 12 01 /12 /12 10 11 /12 /12 08 09 /12 /12 06 07 /12 /12 05 /12 04 /12 03 /12 01 02 /11 /11 12 /11 11 /11 09 10 /11 /11 08 /11 /11 07 06 05 /11 /11 03 04 Fannie Mae Sets Another Record in Q1, Releases New Tool A recovering housing market allowed Fannie Mae to set another record with its most recent quarterly earnings report. In the first quarter of this year, the mortgage financier reported pre-tax income of $8.1 billion, the largest in its history. That breaks the previous record earnings announced by the GSE in the fourth quarter of last year when the company reported pre-tax income of $7.6 billion. During the first quarter of 2012, Fannie saw $2.7 billion in pre-tax income. Fannie Mae attributed the improvement to "strong credit results driven by an increase in home prices, including higher average sales prices on Fannie Mae-owned properties, a decline in the number of delinquent loans, and the company's resolution agreement with Bank of America." The GSE also explained that stronger financial results enabled the release of valuation allowance on deferred tax assets, which added $50.6 billion to net income, bringing the total for 24 net income in the first quarter to $58.7 billion. Comprehensive income stood at $59.3 billion compared with $3.1 billion for the first quarter a year ago. Fannie said it will pay $59.4 billion to Treasury by June 30, bringing the total of its repayments of taxpayer aid to $95 billion. Fannie Mae has so far received $116.1 billion in financial support from taxpayers. However, since the first quarter of 2012, the GSE has not requested any additional funding. To support the mortgage market, Fannie Mae has provided $3.5 trillion in liquidity since 2009. The company's market share of singlefamily securities issuances was 48 percent for Q1. As of the end of last year, the GSE also owned or guaranteed about 22 percent of outstanding debt on multifamily properties. The GSE's single-family serious delinquency rate continued its decline due to foreclosure prevention solutions and stronger credit profiles. As of the end of the first quarter, the delinquency rate stood at 3.02 percent compared to 3.29 percent from the fourth quarter and 3.67 percent a year ago. Fannie Mae also completed more than 43,000 loan modifications during the first quarter, bringing its total since January 2009 to 922,000. The GSE also announced the broad release of a tool that helps to streamline foreclosure prevention efforts. According to a release, Fannie Mae's Servicing Management Default Underwriter (SMDU) tool, which has been developed and tested over the past three years, enables mortgage servicers to work faster and provide better customer service to homeowners as they work to prevent foreclosure. The tool serves as a counterpart to Fannie Mae's Desktop Underwriter and works by assessing a homeowner's financial situation and determining what foreclosure prevention options are available. Through the new technology, servicers can more quickly implement Fannie Mae policy changes. Furthermore, the tool allows servicers to make real-time calls to Fannie Mae's business rules as they collect information from homeowners. SMDU also lets the servicer know if the homeowner is eligible for streamlined processing for any loss mitigation option, which can shorten the process by weeks. Servicers who use the tool are guided with scripts for more consistency and better customer servicer. "SMDU addresses several challenges the servicing industry has faced in recent years by eliminating a manual and resource-intensive process for servicers while improving accuracy and consistency," said Leslie Peeler, SVP of Fannie Mae's national servicing organization. Peeler also explained that while adoption of the tool is voluntary, SMDU will be required at some point in the near future. "SMDU serves the interests of homeowners, servicers, and taxpayers. The bottom line is that we want servicers to prevent as many foreclosures as possible and provide excellent service," she added. KNOW THIS Put-back risk from the GSEs is the most important factor constraining lending, according to Paul Diggle, property economist for Capital Economics.

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