January 27, 2010 / 9:50 PM / 10 years ago

UPDATE 2-Freddie Mac Dec portfolio down, delinquencies jump

(Adds background, details from monthly volume summary)

NEW YORK, Jan 27 (Reuters) - Freddie Mac FRE.P FRE.N, the second-largest U.S. home funding company, said on Wednesday its mortgage investment portfolio shrank at an annualized 10.2 percent rate in December, while delinquencies accelerated on loans it guarantees.

The portfolio decreased to $755.3 billion in December from $761.8 billion the previous month, for an annualized 6.1 percent drop for the year, the McLean, Virginia-based company said in its monthly volume summary.

In December 2008, the portfolio was $804.8 billion.

Delinquencies, which increase stress on the company’s capital, jumped to 3.87 percent of its book of business in December from 3.72 percent in November. A year earlier, the rate was 1.72 percent.

The multifamily delinquency rate accelerated slightly in December, to 0.15 percent from 0.14 percent in November and from 0.01 percent a year earlier.

Last month the U.S. Treasury announced an amendment to the government-sponsored enterprise preferred stock purchase program, or PSPA, raising the capital backstop for Fannie Mae and Freddie Mac from $200 billion each to an open-ended commitment for a three-year period.

Freddie Mac said refinance-loan purchase volume was $27.3 billion in December, up from November’s $19.3 billion.

Activity peaked earlier last year, with March’s $52 billion its largest refinance month since 2003.

The net amount of mortgage-related investments portfolio mortgage purchase agreements entered into in December totaled $2.6 billion, up from the $378 million in November.

The company’s total mortgage portfolio increased at a 5.7 percent annualized rate in December to $2.251 trillion, for an annualized 2.0 percent increase for the year.

The government has been relying heavily on Fannie Mae FNM.PFNM.N 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.

The lowest mortgage rates in decades and high affordability helped the housing market find some footing in 2009 after a three-year slump. But the housing market remains remains highly vulnerable to setbacks and reliant on government intervention. (Editing by Dan Grebler)

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