UPDATE 2-Fannie Mae Feb. portfolio down, delinquencies jump

(Adds background, details from monthly volume summary)

NEW YORK, March 30 (Reuters) - Fannie Mae FNM.P FNM.N, the largest provider of funding for U.S. home mortgages, on Tuesday said its mortgage investment portfolio shrank in February, while delinquencies on loans it guarantees accelerated.

The portfolio decreased by an annualized 14.2 percent to $725.9 billion in February from $735.2 billion in January, the Washington-based company said in its monthly summary.

Year-to-date the portfolio has decreased by an annualized 31.2 percent. In February 2009, the portfolio was $784.7 billion.

Delinquencies on loans in Fannie Mae's single-family guarantee business rose by 0.14 percentage point to 5.52 percent in January -- the most recent data available. A year earlier it was 2.77 percent.

The multifamily delinquency rate rose 0.06 percentage point to 0.69 percent in January. A year earlier it was 0.27 percent.

Delinquencies increase stress on the company's capital.

Fannie Mae and its smaller sibling, Freddie Mac FRE.PFRE.N, were seized by the U.S. government in September 2008 amid heightened worries about shrinking capital.

Fannie Mae's total mortgage portfolio increased at a 1.0 percent annualized rate in February to $3.230 trillion. Year-to-date the portfolio has decreased by an annualized 2.0 percent.

The government has been relying heavily on Fannie Mae and Freddie Mac in its efforts to stimulate the battered U.S. housing market by buying more mortgage loans, easing refinancing and helping homeowners avoid foreclosure.

Fannie Mae last month reported a loss of $16.3 billion for the 2009 fourth quarter and said it requested $15.3 billion from the U.S. Treasury to keep its net worth in positive territory.

The company said it would need additional taxpayer funds in the future to continue operations. (Additional Reporting by Corbett B. Daly and David Lawder; Editing by Leslie Adler)