Fannie Mae cuts portfolio, delinquencies jump
NEW YORK |
NEW YORK (Reuters) - Fannie Mae FNM.N, shrunk its gross mortgage portfolio by an annual rate of about 28 percent in October and delinquencies on loans it guarantees rose sharply in September, the largest U.S. home funding company said on Tuesday.
The government-controlled company slashed its mortgage holdings to $771 billion last month, for a 2.4 percent drop year-to-date.
The portfolio was even smaller at the end of October after factoring in $44.3 billion of net outstanding commitments to sell. That reduced the gross retained mortgage assets to $727.1 billion.
In another sign of the struggle homeowners face in making timely loan payments, Fannie Mae reported a continual jump in the rate delinquency on loans it guarantees in September, the most recent figures available.
The conventional single-family serious delinquency rate rose 27 basis points to 4.72 percent, while the multifamily serious delinquency rate rose 6 basis points to 0.62 percent.
One year ago, these rates were sharply lower at 1.72 percent for single-family and 0.16 percent for multifamily.
Loans that are three months or more past due or in the foreclosure process for single-family homes and those that are 60 days or more past due for multifamily homes are considered serious delinquencies.
As Fannie Mae's portfolio shrank, so did its outstanding debt. The company funds its mortgage asset purchases with debt issuance, and has had less of a need to raise money as its mortgage-related purchases subside.
The company's total debt outstanding dropped by $12 billion in October from September to $803.5 billion, which was down from about $880 billion in October 2008.
Freddie Mac FRE.N, Fannie Mae's smaller rival, on Tuesday also reported a $12 billion drop in its debt outstanding for October to $814 billion, down from a peak of more than $932 billion in March.
Fannie and Freddie "continue to show little interest in growing their retained portfolios in the face of rich valuations," Morgan Stanley wrote in a note.
Mortgage bonds have become increasingly expensive to purchase, especially relative to the cost of issuing debt to fund those purchases.
Freddie Mac, which was also taken under government control in September 2008, reduced its mortgage investment portfolio last month by an annual rate of almost 22 percent to $770.1 billion.
Delinquencies also kept rising on the loans it guarantees, with the rate of late payment on single-family mortgages up to 3.54 percent in October from 3.33 percent in September and 1.34 percent a year ago.
(Reporting by Lynn Adler; Editing by Leslie Adler)
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