Fannie Mae Gross Mortgage Portfolio Grows 2.3% In Sept
10/30 09:02 AM
NEW YORK (Dow Jones)--Fannie Mae (FNM:$0.9751,$0.0751,8.34%) increased its net commitments to buy mortgage bonds to $9 billion in September, up from $4 billion in August, according to data reported Thursday.
Fannie's purchase was greater than that of its sibling Freddie Mac (FRE), which last week announced that its commitments to buy mortgage bonds increased $ 2.5 billion in September.
In the same month, the U.S. Treasury bought $5.074 billion of these bonds in an effort to prop up the housing market.
The Federal Housing Finance Agency, the conservator of both Freddie and Fannie, announced it would ask each company to boost its purchase of mortgage bonds to $850 billion. This is expected to lower the rates borrowers pay on their home loans.
Fannie's gross mortgage portfolio increased slightly, by 2.3%, to $761.4 billion from nearly $760 billion in August.
Also, the rapid increase in single-family delinquency rates, as indicated in the report released Thursday, remains troubling.
Fannie's serious delinquency rate rose to 1.57% in August, the latest data available, from 1.45% in July. It was 1.06% in January.
While these numbers are still low, it represents an increased stress on the company from its holdings of Alt-A and other types of mortgages lent to borrowers with risky credit profiles.
Meanwhile, Fannie Mae's (FNM:$0.9751,$0.0751,8.34%) book of business grew at an annualized compound rate of 8% in September, and 8.8% year-to-date.
Total Fannie Mae (FNM:$0.9751,$0.0751,8.34%) issuance of mortgage bonds was at $38.4 billion in September, up from $32.1 billion in August.
Issuance of Fannie Mae (FNM:$0.9751,$0.0751,8.34%) securities and other guarantees rose at a compounded annualized rate of 8.9% during the month.
Fannie's duration gap, a measure of the portfolio's sensitivity to interest rates, averaged plus one month in September, down from two months in August.
Freddie and Fannie are chartered by Congress to buy mortgages from lenders, freeing them to make more loans.
They repackage the mortgages as securities and sell them again. Both also hold on to large quantities of mortgage securities, profiting from the difference between the interest rates they pay and the cost of debt issued to fund their purchases.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; prabha.natarajan@ dowjones.com
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10-30-080902ET
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