Fannie Mae Sees Mortgage Portfolio Contract in January

Fannie Mae, the government-backed giant that is also the largest U.S. home funding company, said its retained mortgage portfolio fell by a 4.8 percent annual rate in January, after expanding in December but shrinking for 2006 overall.

The mortgage provider’s portfolio declined to $721.4 billion in the month of January after growing by an annualized 12.3 percent in December and falling by 0.4 percent for all of last year.

Fannie Mae has been limiting its mortgage holdings under an agreement with its federal regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), while the mortgage company works through myriad accounting and financial reporting problems.

The mortgage lender said new business acquisitions dipped to $51.1 billion last month compared with $57.8 billion in the month of December.

At the same time, its net retained commitments to purchase U.S. home mortgage loans shriveled to $1.1 billion from $14.9 billion in that time.

Fannie Mae expects $2.3 trillion of mortgages for single-family homes will be created this calendar year, down from last year’s $2.5 trillion.

A drop in demand for home purchase loan products will be the main catalyst, the company said in its monthly business summary.

Last week, Freddie Mac, the second-largest buyer of U.S. home loans, said its portfolio grew by an annualized 4.4 percent in January to $706.2 billion.

It holdings fell by 0.9 percent for all of last year.

SOURCE: Reuters