Freddie Mac said Friday that its portfolio of home loans and mortgage bonds dropped at a 56% annualized rate in August, the month before it was taken over by the government.

The portfolio, which had expanded by $85.8 billion in April through July, fell $37.4 billion in August, to $760.9 billion, as Freddie sold off assets, the company said in its monthly volume summary.

The shrinkage helps explain why the government took control of Freddie and Fannie Mae. Freddie had failed to raise the $5.5 billion of capital it agreed to seek in May, and both companies said they faced additional losses from the housing slump.

Payments at least 90 days delinquent on single-family loans that Freddie either owns or guarantees within bonds rose to 1.11% in August, the company said. The rate was up from 0.46% the year earlier and 1.01% in July.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.