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Fannie Mae Downsizes Portfolio as Delinquencies Decline

The nation's largest mortgage financier is shrinking its mortgage investment portfolio. ""Fannie Mae"":http://www.fanniemae.com reported this week that its holdings declined at a compound annualized rate of 4.1 percent in August, while its total book of business fell by 1.3 percent.

At the same time, delinquency levels fell across the board, according to the GSE's ""monthly summary report"":http://www.fanniemae.com/ir/pdf/monthly/2010/083110.pdf. Fannie Mae's single-family serious delinquency rate dropped 17 basis points in July to 4.82 percent (Fannie Mae reports[IMAGE] [COLUMN_BREAK]

delinquencies with a one-month lag time). The multifamily serious delinquency rate declined 6 basis points to 0.74 percent in July.

Fannie's single-family delinquencies are still 65 basis points above the rate recorded in July 2009, but they have been dropping now for five straight months.

The GSE and its regulator attribute improvements to the company's loss mitigation efforts and the fact that newly acquired loans are of much higher credit quality than in the recent boom years. Some analysts, though, have suggested have suggested the lower past-due numbers are merely the consequence of an increase in GSE foreclosures.

Fannie’s sibling government-backed mortgage firm, ""Freddie Mac"":http://dsnews.comarticles/freddie-macs-portfolio-shrinks-delinquency-rates-mixed-2010-09-27 is seeing the same trends come to light in its mortgage business.

Freddie’s single-family serious delinquency rate dropped 6 basis points to 3.83 percent, according to its August figures. It too, shrank its portfolio by 5.2 percent.

As of the end of August, Fannie Mae’s total mortgage portfolio stood at $3.2 trillion.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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