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GSEs Complete Nearly 1.1M Mods but Number of Mods Still Declining

Since the September 2008 conservatorship, Fannie Mae and Freddie Mac have completed nearly 1.1 million loan modifications, according to the FHFA's fourth quarter 2011 Foreclosure Prevention and Refinance ""report"":http://www.fhfa.gov/webfiles/23522/4q11. Overall, the GSEs have completed more than 2.1 million foreclosure prevention actions since the same time period.

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""Data from the Office of the Comptroller of the Currency show that in the two years ending in the third quarter of 2011, modifications on Fannie Mae and Freddie Mac loans accounted for 40 percent of all loan modifications,"" said General Counsel for the FHFA Alfred M. Pollard in a written testimony before congressmen Monday.

For just the 2011 fourth quarter, about 71,100 loan modifications were completed, compared to about 83,500 in the third quarter.

Pollard said a contributing factor to the decline in modifications seen may be that the initial backlog of eligible borrowers in 2009 has been addressed to some extent, and added the GSEs offer substantial incentive payments to servicers to encourage them to meet timelines for modifications.

Also, in terms of delinquency, Pollard said the GSEs own or guarantee about 60 percent of all mortgages, but account for roughly 29 percent of the seriously delinquent loans.

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*Foreclosure prevention numbers*

-About half of all borrowers who received a modification in the fourth quarter saw their monthly payments reduced by over 30 percent.

-About one-third of modified loans also included principal forbearance.

-A higher percentage of loans modified through HAMP stayed current compared to non-HAMP modifications. For Fannie Mae HAMP mods during the third quarter, 86 percent stayed current compared to 80 percent of non-HAMP mods three months after getting modified. After 6 months in the second quarter, 81 percent of Fannie Mae HAMP mods stayed current compared to 71 percent of non-HAMP mods. After 9 months in the first quarter, 77 percent of HAMP mods stayed current compared to 68 percent of non-HAMP mods.

-For Freddie Mac modifications, 87 percent of HAMP mods stayed current after 3 months compared to 79 percent of non-HAMP mods. After 6 months, 84 percent of HAMP mods stayed current compared to 71 of non-HAMP mods. After 9 months, 80 percent of HAMP mods stayed current compared to 66 percent of non-HAMP mods.

-HARP refinances increased 10 percent in the fourth quarter.

-The total number of home retention actions (repayment and forbearance plans and mods) for the GSEs during the fourth quarter was 120,698, a decrease compared to the third quarter when there were 140,258 actions. For the year 2011, there were 540,352 actions, compared to 832,309 for 2010.

-Short sales and deeds-in-lieu of foreclosure increased 13 percent to 34,895 in the fourth quarter. For the entire year of 2011, there were 125,468 short sales and deeds-in-lieu, compared to 113,996 in 2010.

-Third-party and foreclosure sales saw a slight increase while foreclosure starts decreased in the fourth quarter.

-REO inventory declined for the fifth consecutive quarter as more properties were disposed of than acquired in the fourth quarter.

About Author: Esther Cho

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