[1]Fannie Mae [2]'s gross mortgage portfolio continued its downward trend in December, falling at a compound annualized rate of 26.4 percent, according to Fannie Mae's December 2014 Monthly Summary [3] released recently.
The value of Fannie Mae's mortgage portfolio fell from $424 billion in November down to $413 billion in December. Since the end of June 2010, when the value of the portfolio stood at $818 billion, its compound annualized rate has declined in 53 of the last 54 months. The only month during that time when the portfolio grew was in December 2012, when it increased by 1 percent.
For the entire year of 2014, the average compound annualized rate for the enterprises's gross mortgage portfolio was 15.8 percent. In four different months during 2014, it declined at a compound annualized rate of more than 20 percent, including a high of 28.9 percent [4] from October to November. The 2014 average compound annualized monthly decline rate of 15.8 percent is still an improvement from 2013, when the average monthly decrease was 22.5 percent.
December's compound annualized rate decline of 26.4 percent for the gross mortgage portfolio was the eighth-highest rate for any one month since the FHFA's conservatorship of Fannie Mae began in September 2008. The highest rate of decline occurred in January 2010, when it dropped by 44.8 percent.
"As per the Senior Preferred Stock Purchase Agreement with Treasury, Fannie Mae was required to reduce the size of its gross mortgage portfolio to $469.6 billion by December 31, 2014," Fannie Mae spokeswoman Katherine Constantinou said. "In October 2014, FHFA requested an additional annual reduction of 10 percent, which revised the portfolio cap to $422.7 billion for the year ended 2014."
Despite the large dropoff in Fannie Mae's gross mortgage portfolio in December, other components propelled the overall Book of Business to a compound annualized rate increase of 1.6 percent from November, according to the summary. It was the third time in the last four months the overall Book of Business has grown following eight straight months of decline to begin 2014.
Monthly increases in new business acquisitions and total Fannie Mae mortgage-backed securities and other guarantees pushed the value of the Big Book of Business up to $3.124 trillion in December, up from $3.119 trillion in November.
Also in December, the serious delinquency rate on Fannie Mae's conventional single-family mortgage loans declined by two basis points from November down to 1.89 percent. December marked the 37th month in a row the serious delinquency rate declined at least one basis point month-over-month; the last time the rate did not decline was when it held steady at 4.0 percent from October to November 2011.
"As a result of home retention solutions, foreclosure alternatives, and completed foreclosures, as well as the company’s acquisition of loans with stronger credit profiles since the beginning of 2009, Fannie Mae’s single-family serious delinquency rate has declined each quarter since the first quarter of 2010," Constantinou said.
The value of Fannie Mae's mortgage-backed securities and other guarantees totaled $2.803 trillion in December, representing an annualized compound rate month-over-month increase of 5.5 percent – marking the fourth time in the last sixth months the total value of Fannie Mae MBS has expanded after starting 2014 with six straight months of decline. For the entire year of 2014, the value of Fannie Mae's MBS and other guarantees remained nearly unchanged from its value at the end of the previous year – $2.083564 trillion in 2014 compared to $2.083849 trillion at the end of 2013.
The number of loan modifications Fannie Mae completed in December (8,951) also increased from November (7,417), giving the enterprise 122,823 loan mods for the entire year of 2014 – an average of 10,235 per month.