About five months after Fannie Mae and Freddie Mac expanded their loan-to-value (LTV) offerings, many lenders are optimistic they will benefit from the products at some point — but those lenders have yet to see much impact on mortgage loan origination volume, according to a recent Fannie Mae commentary.

In December, the government-sponsored enterprises (GSEs) began offering certain loans with a maximum LTV — a financial term commonly used by lenders to represent the ratio of the first mortgage lien as a percentage of the total appraised property value — of 97 percent. A month later, the Federal Housing Administration (FHA) reduced annual mortgage insurance premiums (MIPs) by 0.5 percent on new loans. The goal of these initiatives was to expand access to mortgage credit and make monthly mortgages more affordable to qualified and creditworthy borrowers.

But according to Fannie Mae’s Economic & Strategic Research Group, a survey of senior mortgage executives in February revealed that while a majority of lenders surveyed think the GSEs’ 97 percent LTV products and the FHA’s MIP reduction will be good for them and for consumers, a third of those polled said they do not expect these efforts to increase mortgage originations.

According to the survey, which was conducted as part of Fannie Mae’s quarterly Mortgage Lender Sentiment Survey (MLSS), 81 percent of institutions that responded reported that they plan to offer the GSE-eligible loans sometime this year, but the expected impact on their own firm’s origination volume is more muted than their expectations for the impact on the overall mortgage market in the future. Of those planning to offer the loans, 44 percent said they expect them to “somewhat increase” their origination volume, and 54 percent said they expect volume to remain about the same.

Since some consumers who take on GSE 97 percent LTV loans are required to take homeownership counseling programs, Fannie Mae also examined lenders’ views on these programs. The vast majority, or 91 percent, of lenders reported offering or referring consumers to homeownership education and counseling programs, with most citing a desire to help borrowers better manage their finances. Midsized and smaller lenders found less value in homeownership education and counseling programs, according to the survey.

As for lenders’ views on the value of homeownership education and counseling programs, those results were also mixed: 33 percent said they have value; 36 percent said they do not; and 31 percent were neutral.

“Given the mixed perceptions of lenders about the benefits from prepurchase counseling and the academic research suggesting that it is unclear whether counseling delivers a meaningful improvement in outcomes, there appears to be an opportunity to investigate whether it is possible to enhance counseling strategies to generate, improve and more clearly demonstrate consumer, lender and investor benefits,” wrote Steve Deggendorf, director of business strategy for Fannie Mae’s Economic & Strategic Research Group, in a commentary about the survey’s results.

Email Amy Swinderman.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription