On June 29, 2023, both Fannie Mae and Freddie Mac announced enhancements to their MBS disclosures starting with the September monthly release[1]. The data covers active pools issued back to January 2022. As rates were quite low prior to this time, these disclosures cover the relevant period of high demand for buydowns:

In a recent post, we discussed trends in commercial real estate outstanding debt, with an emphasis on the Agency multifamily market[1]. We mentioned that the key difference between risk sources associated with multi- and single-family debt is that the I/O structure and balloon term that predominates in multifamily loans implies that there is significant refinance risk in this market.
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We also previously wrote that we have collected all the loans in the major Agency multifamily books and verified that this data was consistent with the Federal Reserve’s Z.1 report[2]. We are now prepared to take some first steps at estimating the extent of this risk. To simplify things, in this note, we look just at the two major GSE multifamily programs, Freddie Mae DUS[3] and Freddie Mac K-deals[4].

To begin, as of August 1, 2023, the Fannie Mae DUS deals account for $384.5 bn or 86% of the total FNM book of $448.1 bn, while Freddie K deals account for $317.9 bn or 83% of $384.9 bn outstanding as of June 1, 2023. Superficially similar.
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Below find the maturities for the two programs by year starting in June 2023 for Freddie Mac and August 2023 for Fannie Mae[5]:

On September 15, Recursion Data was cited in a story in Commercial Mortgage Alert that pointed out that Fannie Mae “has started to restrict the interest-only payment periods on debt backing properties built before 2000.” They cite Recursion data in pointing out that Fannie Mae purchased $4.2 bn in multifamily loans in August, bringing the year-to-date total to 35.3 billion, down 20% from the same period in 2022.
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Recursion is pleased to provide excellent support to all participants in this crucial segment of the commercial real estate market.

We’ve written many, many times about the inexorable rise in the role of nonbanks in the mortgage market[1]. A variety of factors have contributed to these gains, including superior technology, a relatively less oppressive regulatory environment, and Covid-19 chasing people out of bank branches online. 
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This picture can be a little blurry, however, depending on the way you look at the market. There is, for example, the distinction between servicing book shares and origination shares. Our agency disclosure data doesn’t provide information on originators, but we can use “seller” as a proxy. The table below looks at the trends in outstanding portfolio and issuance for the conforming and Government markets over the period January 2022 – July 2023:

Overview
The release of the Financial Accounts of the United States (also known as the Z.1[1]) is always an opportunity to learn about important structural changes in the mortgage market. This is particularly the case in our current environment of high home prices and borrowing costs which we call “mortgage winter”. In this note, we focus on the breakdown on the ownership of risk for single family mortgages. This is not the share of ownership of MBS; it is who bears the credit risk for the loans.

Unsurprisingly, the growth in single-family mortgage credit outstanding in Q1 grew by the smallest amount in almost 7 years in the first quarter of 2023:

The last time we discussed the topic of appraisal waivers was at the end of 2022, when we looked at the impact of sharply higher interest rates on the use of this flexibility. Property valuation impact profitability of loan origination. Lenders can gain a significant advantage if they fully understand and choose from all the options in front of them. Given recent market developments, it is no doubt time to take another look at this topic, but structural change has come to this space, so it makes sense to discuss this first.

​Until last year we were in a binary appraisal/waiver world. One or zero. For some time, there have been discussions of various “modernization” programs somewhere in between, with valuations produced via a process that requires less information than that obtained from a full appraisal but not no information.

Rising inflation and 30-year mortgage rates near 20-year highs of around 7%, coupled with historically high house prices, have sharply dampened housing demand in the US. This is particularly true for lower-income borrowers where household budgets are badly stretched. These developments have caught the attention of policymakers, who, in response, have taken it upon themselves to lower mortgage fees to partially compensate for these factors.

This is an interesting moment in the formation of housing policy as we have two sets of changes taking effect close together in time. First, FHA announced on February 22, 2023, that it would cut its mortgage insurance premiums by 0.30% to 0.55% effective March 20. More recently, on March 22, GSEs implemented a rather complex set of changes in their upfront fee schedules, effective May 1:

As famous investor Warren Buffett once stated, “Only when the tide goes out do you learn who has been swimming naked.” Well, it turns out that only in a declining market can you see which segments are resilient. In this case, we will look at Planned Unit Developments or PUD’s. A PUD is a planned neighborhood, generally consisting of a group of single-family homes that are bound together by a Homeowners Association (HOA). In this manner, it is like a condo, with the significant difference that the property is usually a stand-alone structure that the buyer owns along with the lot on which it is located. Details about eligibility can be found in Fannie Mae’s selling guide[1].

Below finds the ratio of purchase mortgage deliveries from PUDs to those of 1-4 unit conventional loans: