Fannie: December Delinquency Rate 2.42% Vs Nov. 2.13%

Mortgage company Fannie Mae (FNM) had a sharp increase in the delinquency of single-family home loans in December as the U.S. economy continues to slow.

In its monthly report released Friday, Fannie said its delinquency rate rose to 2.42% in December from 2.13% in November. In October, that figure was 1.89%.

The delinquency rates have seen a steady increase in the past year. In January of last year, the number was 1.06%.

Fannie's commitments to buy mortgage bonds stood at $2.97 billion in January, down from $11.7 billion in December and $7.9 billion in November.

Over the past few months, the roles of Fannie and sibling Freddie Mac (FRE) have diminished in the mortgage market as both the U.S. Treasury and the Federal Reserve have emerged as backstop buyers with deep pockets.

The U.S. Treasury, so far, has bought $97.5 billion of agency mortgage-backed securities, while the central bank has bought $134.85 billion and is on target to buy $500 billion or more if necessary.

However, market participants still keep tabs on Fannie and Freddie's portfolios as an indication of their financial health and their ability to continue to play a role as both guarantors and buyers of mortgage bonds.

Other details in the monthly report show that Fannie's total mortgage securitizations stood at $3.31 billion in January, and the duration gap, a measure of the portfolio's sensitivity to interest rates, averaged two months in January.

On Thursday, Fannie said its 2008 loss stood at nearly $60 billion and it will see more red ink this year.

Fannie and Freddie were placed under conservatorship in September, and the strong government ties have helped them when they raise funds. Fannie raised a record $15 billion on Thursday.

-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; [e-mail]

(Prabha Natarajan contributed to this report)