Fannie Mae Mortgage Portfolio Expands in March

Fannie Mae, the largest U.S. home funding company, said on Tuesday that its retained home mortgage portfolio posted its first monthly increase of 2007.

The company’s mortgage portfolio rose by a 1.1 percent annual rate in March to $712.8 billion, after slumping by 14.4 percent in February and by a more modest 4.8 percent in January.

The portfolio shrank by 0.4 percent for all of 2006.

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

Fannie Mae total business grew at a 13.5 percent compound annualized rate in March to $2.59 trillion, driven by its home mortgage-backed securities. The business book has expanded by 9.5 percent year-to-date.

Fannie Mae issued $46.8 billion in MBS last month, up from $41.7 billion in February, bringing the year’s total to $132.4 billion.

Its retained commitments to purchase home mortgages also rose in March, increasing to $14.1 billion from $10 billion the prior month.

Fannie Mae said that adjustable-rate mortgages represented a 21.1 percent average share of conventional home loan applications in March… the lowest monthly share since July 2003.

Many homeowners with ARMs that are resetting this year, when short-term home loan rates are sharply higher than when the mortgages were made, now seek home loan refinancing to obtain fixed-rate mortgages.

SOURCE: Reuters