UPDATE 1-Fannie Mae says portfolio, delinquency rates rise

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NEW YORK, Sept 30 (Reuters) - Fannie Mae (FNM.P), the largest provider of funding for U.S. home mortgages, on Tuesday said the rate of growth in its investment portfolio slowed in August to a level not seen since the spring.

The rate of delinquencies on loans guaranteed by the company in July shot up the most in nearly three years.

Fannie Mae's mortgage investment portfolio increased at a 3 percent annualized rate last month to $759.98 billion, the Washington-based company said in a statement. Its agreements to buy mortgages in months ahead fell to $25 billion in August from $43.3 billion in July.

But the slowdown in growth came ahead of the government's seizure of the company and rival Freddie Mac on Sept. 7, which gave the companies the right to grow their holdings to $850 billion each through 2009 to buoy mortgage markets. Government control assured a sound financial base for greater activity by the companies, whose roles have become more crucial to the economy during the credit crunch.

Concerns that the companies were being dangerously hurt by rising delinquencies led to the conservatorship by their regulator, the Federal Housing Finance Agency.

Fannie Mae said serious delinquencies on loans it backs rose by 0.09 percentage point, the largest point increase since November 2005, to 1.45 percent in July, the latest month with data available. (Reporting by Al Yoon; Editing by Gary Hill)