Fannie Mae issued $34.5 billion of MBS in April, a 36% plunge from the prior month, according to figures released by the GSE Friday morning. In April its MBS issuance rose 4.2%.

The weaker showing is another sign that residential loan production in the primary market was slowing significantly early this spring. As lenders fund fewer loans, Fannie (and Freddie Mac) sees less product in the secondary market. When their purchases slide it affects their ability to issue new MBS.

Freddie Mac, for instance, registered a 38% decline in MBS issuance in March, citing a large decline in refinancings, and then experienced a 5% drop in MBS issuance during April.

During the first four months of 2011, Fannie issued $209.8 billion of MBS compared to $121.4 billion for Freddie.  

Fannie also reported that the size of its giant mortgage portfolio declined to $747 billion, down from $789 billion at yearend 2010. Under its conservatorship agreement, Fannie must reduce its portfolio to no more than $729 billion by Dec. 31, according to Federal Housing Finance Agency (FHFA) acting director Edward DeMarco. Fannie is "expected to be below that limit by year-end," DeMarco told a congressional panel this week.  

Meanwhile, the serious delinquency rate (90 days or more past due) on Fannie guaranteed single-family loans fell to 4.27% in March, down 17 basis points from the previous month and 120 bps from a year ago.  The serious delinquency rate on Fannie's guaranteed multifamily loans is 64 bps, down 1 bp from February.

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