Fannie Mae Takes Lead In Mortgage Risk Taking

by confoundedinterest

Mortgage giant Fannie Mae recently released their Q3 2018 loan acquisition data base. And it revealed that Fannie Mae is seeing a spike in risk-taking.

First, the average credit (FICO) score. Both Fannie Mae and Freddie Mac are taking on less risk than before 2008 and are moving together.

avgfico

But in terms of loan-to-value (LTV) ratio, Fannie Mae (orange line) just spiked above Freddie Mac. Both are now above pre-2008 (crisis) levels.

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Fannie Mae also saw a surge in average debt-to-income (DTI) in Q3 2018. Their average acquisition DTI is now about the same as 2005.

dti

Let’s see how Fannie and Freddie cut expenses in preparation for being released from conservatorship with their regulator, FHFA.

Here are Fannie Mae and Freddie Mac arguing over market share before being turned loose.

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