FHA lenders were first to light up the boards with so-called “jumbo light” securities earlier this year, contributing to three Ginnie Mae pools for April settlement amounting to $17.2 million. Since then, however, Fannie Mae (FNM) and Freddie Mac (FRE) have have breathed at least some life into conventional lenders’ conforming jumbo efforts, with $301.4 million for May and June-to-date delivery — but they found themselves topped yet again by Ginnie’s $331.1 million in May alone, according to statistics provided by eMBS Inc., a provider of internet-based access to mortgage data and analytics. Between the GSEs, Freddie has been the larger producer in the jumbo-conforming space, with $223.2 million booked in May, and and another $63.5 million recorded thus far in June. In contrast, Fannie issued a only handful of pools for May amounting to a paltry $23.7 million. That low total should be offset to some degree, however, by increasing purchases for its own retained portfolio — Fannie announced last month that it would “eat” the so-called g-fee on eligible loans purchased for its portfolio in an effort to jump start the market. But for Fannie, a more pertinent obstacle to the growth of its jumbo-conforming efforts might be the fact that all such loans must be manually underwritten, a limitation not shared by sister GSE Freddie Mac. According a May seller announcement, a future release of Fannie’s Desktop Underwriter platform will include jumbo-conforming loan limits, eligibility, and underwriting guidelines — but until that release is reality, the truth is that Fannie isn’t playing cards with a full deck. Freddie’s automated underwriting system, Loan Prospector, has accepted conforming jumbos from inception of its program. In addition, Freddie has opened the bulk transaction path to experienced sellers with existing portfolios of eligible jumbos; so far, Fannie Mae has only indicated that it will consider bulk purchases. It’s worth nothing that the lead now being taken by FHA mortgage bankers in originating jumbos doesn’t necessarily indicate greater efficiencies in the FHA lending process, or better acceptance in MBS markets. Indeed, the need to modernize and de-bureaucratize the FHA loan process is well-known by most market participants. Instead, the resurgence of FHA insured lending most certainly reflects the degree to which subprime lending supported (and drove) higher-priced housing. Disclosure: The author was long FRE and held no positions in FNM when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

More: