Portfolio Growth Slows at Freddie

Freddie Mac's mortgage purchase activity declined by 12.6% in July compared to the prior month and the growth of its retained portfolio slowed to an annual rate of 1.9%.

The secondary market agency's monthly volume report shows that Freddie acquired $41.89 billion in mortgages during July, down from $47.95 billion in June. Purchase volume totaled $44.76 billion in July 2004.

The July report also shows that the total assets in the retained portfolio fell by nearly $5 billion during July and ended the month at $660.03 billion. In July 2004, the retained portfolio had $656.34 billion in assets.

Freddie Mac and Fannie Mae used to grow their portfolios at a 10%-15% annual rate until they became enmeshed in accounting scandals and the Bush administration and Federal Reserve Board chairman Alan Greenspan called for portfolio limits.

The Senate Banking Committee passed a GSE bill in late July that would require the two government-sponsored enterprises to significantly reduce the size of their portfolios.

Fannie and Freddie oppose limits and the outlook for passage of a GSE reform bill with portfolio limits is unclear. Congress returns from its August recess next week to resume work on GSE reform.

Meanwhile, Freddie's issuance of mortgage-backed securities (participation certificates) and structured securities declined slightly to $28.6 billion in July from $29.9 billion in June.

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