A regulatory report released by the government found some big differences between the profile and performance of privately issued mortgages and loans issued by Fannie Mae or Freddie Mac.
Between 2001 and 2008, less than half of all loans included in private-label mortgage-backed securities had a FICO score above 660. But on mortgages acquired by Fannie Mae and Freddie Mac — 84 percent had scores that high.
Those were some of the findings from the report released Monday from the Federal Housing Finance Agency, Data on the Risk Characteristics and Performance of Single-Family Mortgages Originated from 2001 through 2008 and Financed in the Secondary Market. FHFA, which regulates and currently controls Fannie and Freddie, said it analyzed $8.6 trillion in mortgages.
Nearly a third of privately securitized loans had scores less than 620, while just 5 percent of their agency counterparts had scores below 620.
FHFA said 82 percent of agency loans acquired during the eight-year period had loan-to-values of no more than 80 percent.
The share of private-label loans with LTVs at or below 80 percent was, however, just two-thirds. The proportion of private-label loans with low LTVs rose from 54 percent of 2001 originations to 81 percent of 2008 production.
The decline in LTVs on privately issued mortgages was attributed to the growing use of second mortgages — a trend that the regulator claimed “contributed to the unusually poor performance of loans with low LTV ratios relative to past experience.”
Fannie and Freddie saw the share of fixed-rate mortgages they acquired fall from 96 percent in 2001 to 79 percent in 2004. Over the full term reported, fixed-rate share was 88 percent at the government-sponsored enterprises.
But on private-label issuances, fixed-rate mortgages accounted for only 30 percent of loans originated from 2001 to 2008. Fixed-rate share rose from 25 percent in 2004 to 47 percent in 2008.
Around 5 percent of fixed-rate mortgages acquired by Fannie and Freddie were at least 90 days past due at some time before Dec. 31, 2009. The rate on adjustable-rate mortgages was 10 percent.
However, on loans from private issuances, 20 percent of fixed-rate loans had been delinquent and 30 percent of ARMs were late at some point.
