The combined serious delinquency rate at Fannie Mae and Freddie Mac was 4.35% in August, down 10 basis points from the previous month and 68 bps from the peak in February, according to a report from the Federal Housing Finance Agency. As the housing crisis built, more Fannie and Freddie mortgages fell into default, until the percentage of its portfolio in serious delinquency reached 5.03% in February. As the two companies began liquidating those assets either through short sales or REO and began pushing modifications on those mortgages, the rate began dropping, averaging 9 bps per month. The Fannie Mae serious delinquency rate was 4.7% in August, and 4.2% for Freddie Mac. Improving credit costs at the two companies will determine how much additional capital it would need from the Treasury Department. The FHFA estimated the two firms could need anywhere between $221 billion and $363 billion through 2013. Through August, Fannie and Freddie held 1.5 million mortgages in 60 days delinquency or worse. Nearly two-thirds of those were originated for borrowers with credit scores at or above 660. Fannie seriously delinquent mortgages nearly double those at Freddie. Both GSEs combined for 45,051 completed loan modifications in August, including roughly 13,000 done through the Treasury's Home Affordable Modification Program. The total amount of loan modifications is down 17% from more than 54,000 modifications in July. For the year, both Fannie and Freddie have modified more than 408,000 mortgages through its own programs and HAMP. Including all other foreclosure prevention methods such as short sales, deeds-in-lieu, forbearance plans and repayment plans, both Fannie and Freddie prevented 76,389 foreclosures in August and 668,461 for the year. Write to Jon Prior.