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Freddie Mac’s Portfolio Expands for Fifth Straight Month, This Time by $4.5 Billion

Money [1]Freddie Mac [2]'s total mortgage portfolio expanded at an annualized rate of 2.8 percent in June, marking the fifth consecutive month and the 10th time in the last 12 months the portfolio has grown, according to Freddie Mac's June 2015 Monthly Volume Summary [3] released on Wednesday.

The serious delinquency rate on Freddie Mac-backed single-family residential mortgage loans fell by another 5 basis points from May to June, down to 1.53 percent–virtually the same as the 1.52 percent serious delinquency rate reported for Freddie Mac-guaranteed loans in November 2008 at the start of the financial crisis. Freddie Mac's serious delinquency rate was less than half of the nationwide rate reported by CoreLogic for May, which was 3.5 percent.

The number of homeowners who received permanent loan modifications totaled 4,895 for June, a slight increase from 5,490 in May. With 30,312 modifications for the first half of 2015, Freddie Mac is averaging 5,052 modifications per month. This figure represented a decline of about 500 mods per month from 2014's monthly average of 5,596. Freddie Mac tweeted on Friday, "We helped nearly 4,900 families avoid foreclosure last month and over 30,000 in the first half of 2015."

The expansion of Freddie Mac's portfolio represented an increase of about $4.51 billion, up to nearly $1.923 trillion. It was the portfolio's largest expansion since December 2014, when it grew by $7.1 billion at an annualized rate of 4.5 percent. The 2.8 percent expansion rate is the second-highest during the last 12 months, second only to December's 4.5 percent. At the beginning of that 12-month period, in July of 2014, the portfolio's value was $1.895 trillion.

Though the portfolio has seen expansion in 10 of the last 12 months, June was only the 17th time in the last 66 months that the portfolio has grown dating back to January 2010.

"Driven by low mortgage rates and surging home sales, conventional mortgage activity is up substantially from one year ago," Freddie Mac Chief Deputy Economist Len Kiefer said. "According to our latest estimates, conventional mortgage origination volume is up $139 Billion (+30 percent) in the first half of 2015 compared to the first half of 2014. We expect interest rates to rise gradually and refinance volume to slow substantially in the second half of 2015, more than offsetting increased purchase mortgage activity. As a whole, we expect mortgage origination volume in 2015 to be up $100 billion (8 percent) compared to 2014."

Single-family refinance loan purchase and guarantee volume totaled $20.3 billion in June, up slightly from $20.1 billion in May. The percentage of single-family refinance loan purchase and guarantee volume that comprised the total single-family mortgage portfolio fell from 61 percent in May to 56 percent in June. The percentage of Freddie Mac's total single-family refinance volume was 9 percent in June, down from 10 percent in May.

The aggregate unpaid principal balance (UPB) of the Freddie Mac's mortgage-related investments portfolio declined by about $7 billion from May to June after declining about $9.8 billion from April to May. Freddie Mac's mortgage-related securities and other guarantee commitments saw an annualized rate increase of about 5.3 percent in June.