Fannie Purchases Hit 4-Year Low

Under pressure from its regulator to raise capital, Fannie Mae saw its loan purchases fall to a four year-low in February as the company continued to shrink its portfolio.The government-sponsored enterprise acquired just $40.2 billion in loans during the month, its lowest acquisition volume since February of 2001. So far this year, Fannie has purchased $88 billion in loans, giving it an estimated market share of 22% (according to National Mortgage News), compared with a 27% market share for all of last year. Its portfolio shrank at an annualized rate of 19% during the month, to $875 billion. In an analyst note, Smith Barney attributed half the portfolio decline to asset sales. The investment banker said it expects negative portfolio growth to continue at Fannie "until it reaches its capital target level, though rising rates (which could boost its capital position) could temper that pace if sustained." The company is expected to restate prior years' earnings by $9 billion to $11 billion.