| Fannie Poised to Dive Deeper into Subprime
COO Tim Howard makes comments at Merrill Lynch Conference December 11, 2003 By MortgageDaily.com staff |
| Despite a slowed economy, Fannie Mae said it is in a suitable position to continue expanding its activity in the higher-risk loan market.
The mortgage giant’s chief operating officer, Timothy Howard, recently told investors that although credit risk management has reemerged as an area of focus due to a slowed economy, Fannie has managed well and has the potential to dive further into the subprime market without “notable deterioration” occurring in its credit loss performance. According to Howard, Fannie’s credit loss ratio for the risky loans was recently half of a basis point, which is “substantially less” than for the rest of its portfolio. “We don’t expect our credit loss rate to remain at half a basis point going forward,” said Howard, in a prepared remarks statement. “As we have said many times, a ‘normal’ credit loss rate for us is probably in the range of two to three basis points.” However, at that level, the residential credit loss rate would still be “dramatically lower” than that of the banking industry, he added. According to Fannie, its residential mortgage credit loss ratio in this year’s second quarter was 0.4 basis points, while it was 14 basis points for all commercial banks. |
