|FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 05/07/2015|
Risk Management—Single-Family Mortgage Credit Risk Management—Credit Profile Summary—Jumbo Conforming and High-Balance Loans” in our 2014 Form 10-K for information on our loan limits.
Credit Profile Summary
Our acquisitions in the first quarter of 2015 continued to have a strong credit profile with a weighted average original LTV of 74% compared with 77% in the first quarter of 2014. Our acquisition of loans with original LTV ratios over 80% decreased to 26% in the first quarter of 2015, compared with 31% in the first quarter of 2014. This decrease was primarily due to an increase in our acquisitions of refinancing loans, which increased to 63% in the first quarter of 2015, compared with 55% in the first quarter of 2014, and a corresponding decline in our acquisitions of home purchase mortgage loans. The weighted average FICO credit score of our acquisitions increased to 748 in the first quarter of 2015, compared with 741 in the first quarter of 2014. Our acquisitions of loans with FICO credit scores at origination of 740 or above increased to 63% in the first quarter of 2015, compared with 57% in the first quarter of 2014. Our acquisition of loans with FICO credit scores at origination of less than 700 decreased to 17% in the first quarter of 2015, compared with 22% in the first quarter of 2014.
The credit profile of our future acquisitions will depend on many factors, including our future guaranty fee pricing and any impact of that pricing on the volume and mix of loans we acquire; our future eligibility standards and those of mortgage insurers, FHA and VA, the percentage of loan originations representing refinancings, changes in interest rates, our future objectives and activities in support of those objectives, including actions we may take to reach additional underserved creditworthy borrowers, government policy, market and competitive conditions, and the volume and characteristics of HARP loans we acquire in the future. We expect the ultimate performance of all our loans will be affected by borrower behavior, public policy and macroeconomic trends, including unemployment, the economy and home prices. In addition, if lender customers retain more of the higher-quality loans they originate, it could negatively affect the credit profile of our new single-family acquisitions. We discuss our efforts to increase access to mortgage credit for creditworthy borrowers in “Executive Summary—Single-Family Guaranty Book of Business—Recently Acquired Single-Family Loans.”
HARP and Refi Plus Loans
Since 2009, we have offered HARP under our Refi Plus initiative, which was designed to expand refinancing opportunities for borrowers who may otherwise be unable to refinance their mortgage loans due to a decline in home values. HARP offers refinancing flexibility to eligible borrowers who are current on their loans and whose loans are owned or guaranteed by us and meet certain additional criteria. Under HARP, we allow our borrowers who have mortgage loans that have note dates prior to June 2009 with current LTV ratios greater than 80% to refinance their mortgages without obtaining new mortgage insurance in excess of what is already in place. Accordingly, HARP loans have LTV ratios at origination in excess of 80%. HARP loans cannot (1) be an adjustable-rate mortgage loan, if the initial fixed period is less than five years; (2) have an interest only feature, which permits the payment of interest without a payment of principal; (3) be a balloon mortgage loan; or (4) have the potential for negative amortization. In April 2013, FHFA announced the extension of the ending date for HARP to December 31, 2015.
The loans we acquire under HARP have higher LTV ratios than we would otherwise permit, greater than 100% in some cases. Since 2012, we have acquired HARP loans with LTV ratios greater than 125% for fixed-rate loans of eligible borrowers. In