Mortgage giant Fannie Mae‘s (FNM) book of business grew at an annualized rate of 10.1% in July and held at $3.2trn at the end of the month, according to a monthly summary. But that was almost the extent of the positive news Thursday, as issuance and the total mortgage portfolio contracted and delinquencies rose at the mortgage investor. Fannie, which purchases and securitizes mortgage loans, posted $79.7bn of issuance in July, down 39% from $130.9bn in June but more than double $36.5bn of issuance in July 2008. The gross mortgage portfolio fell at an annual rate of 18.2% and held at $779.4bn at the end of the month. At the same time last year, the portfolio posted an annual growth rate of 14.4%. As the mortgage portfolio contracts, the performance of the loans continues to deteriorate. The rate of conventional single-family mortgages seriously delinquent rose 26bps in June to 3.94%, compared with 1.36% in June 2008. The rate of serious delinquencies among multifamily mortgages inched up 1bp to 0.51%, compared with 0.11% a year ago. Fannie participates in the Federal Reserve‘s agency mortgage-backed securities purchase program, through which the Fed plans to buy up to $1.25trn of MBS from Fannie and its brother company Freddie Mac (FRE) as well as Ginnie Mae. But comments from certain Fed officials indicate a move toward ending the program before the full purchase amount is reached. According to Federal Reserve Bank of Richmond president Jeffrey Lacker, the full purchase amount may prove unnecessary if purchases so far provide enough liquidity. “With the economy leveling out and beginning to grow again later this year, and with bank reserve demand ebbing as financial conditions improve, I will be evaluating carefully whether we need or want the additional stimulus that purchasing the full amount authorized under our agency mortgage-backed securities purchase program would provide,” Lacker said in a speech Thursday. Write to Diana Golobay.

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