Asset Sales Outpace Portfolio Purchases at Fannie

Fannie Mae said it sold nearly $30 billion in fixed-rate mortgage-backed securities in the second quarter as asset sales continue to outpace portfolio purchases during the first six months of this year."We can achieve our liquidity function through sales, as well as purchases," Fannie chief executive Daniel Mudd said during conference call with investors and securities analysis. The CEO indicated that pricing and risk curtailed purchases. But demand for fixed-rate product resulted in a good return for shareholders. Fannie has to reach a 30% capital surplus by Sept. 30 and asset sales and retained earnings are helping to meet that goal. "We feel comfortable with our capital plan," Mr. Mudd said. Fannie executives stressed they are not chasing exotic mortgage products but they are seeing opportunities as interest rates rise and consumers start to move safer loan products. In July, Fannie issued $50 billion in MBS, its best month in over two years.