Fannie Mae's retained portfolio dropped below the $800 billion mark in July, after the company shed nearly $20 billion in assets.Last summer the congressionally chartered mortgage giant held nearly $900 billion in mortgage assets on its books. In an effort to bolster cash reserves, Fannie has been actively selling loans out of its retained portfolio. However, the company -- which is undergoing a massive earnings restatement -- out-purchased its cross-town rival, Freddie Mac, for the second month in a row. In July, Fannie acquired $52.5 billion in mortgages to Freddie's $41.8 billion. In April and May Freddie out-purchased Fannie, something it had not done for years. Fannie Mae also reported that the ARM share of conventional mortgage applications fell by nearly 2% in July to 29.9%, the lowest monthly average share for adjustable-rate mortgages since March of 2004.

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