Fannie portfolio jumps 35 pct, delinquencies mount

NEW YORK, June 29 (Reuters) - Fannie Mae FNM.NFNM.P said its gross mortgage portfolio grew at a 35.1 percent annual rate in May, after a 19.2 percent drop in April, while the serious delinquency rate on loans it guarantees accelerated.

Mortgage holdings of the largest U.S. home funding company rose to $789.6 billion from $770.1 billion the prior month and from $787.3 billion at the end of last year, Fannie Mae said on Monday.

The capital-constrained company, which the government took over along with Freddie Mac FRE.NFRE.P in September 2008, can expand its portfolio to $900 billion before starting to reduce it next year.

The rate of serious delinquent payments on single-family mortgages that Fannie Mae guarantees jumped 27 basis points to 3.42 percent in April, the latest data available. A year earlier, the rate was 1.22 percent.

On the multifamily side of the business, the serious delinquency rate rose 2 basis points to 0.36 percent, four times the 0.09 rate a year earlier.

The company said its mortgage refinance volume rose to $57 billion in May and that it should stay above historical norms for the near term.

Fannie Mae started accepting refinance mortgages under the government’s Making Home Affordable Program in April. “We expect that the MHA Program will bolster refinance volumes over time as major lenders adopt necessary system changes and consumer awareness continues to build,” the company said in its monthly summary.

Fannie Mae provided $71.6 billion of liquidity to the market in May through $67.7 billion of mortgage-backed securities issuance, excluding whole loan securitizations held in the portfolio, and $3.9 billion in net retained commitments last month.

It securitized $61.4 billion of whole loans held for investment in its portfolio in May.

On Friday, Freddie Mac FRE.NFRE.P said it reduced its mortgage investments by an annual 9.9 percent rate in May to $823.4 billion. Single-family delinquencies rose to 2.62 percent, more than triple the 0.86 percent a year earlier.

Reporting by Lynn Adler; Editing by Kenneth Barry