How Fannie and Freddie Work to Prevent Foreclosures

Fannie Mae and Freddie Mac completed 9,082 foreclosure prevention actions in October 2019, bringing the total to 4,390,118 since the start of the conservatorships in September 2008 according to the Federal Housing Finance Agency (FHFA).

Most of the actions taken by Fannie Mae and Freddie Mac have been permanent loan modifications. Another 26% of actions taken have been modifications with principal forbearance. Modifications with extend-term only accounted for 67% of all loan modifications during the month.

The FHFA also measured the GSE’s mortgage performance, finding that the serious delinquency rate remained unchanged at 0.65% between October and September. Third-party and foreclosure sales increased 5 percent from 3,021 in September to 3,174 in October while foreclosure starts decreased from 10,975  to 9,678 month-over-month.

Additionally, total refinance volume increased in October 2019 as mortgage rates fell inprevious months to lows last observed in 2015. Mortgage rates increased in October: the average interest rate on a 30-year fixed rate mortgage rose to 3.69 percent from 3.61 percent in September.

The percentage of cashout refinances decreased to 38% mortgage rates fell in previous months, and the FHFA notes that this is creating “more opportunities for noncashout borrowers to refinance at lower rates and lower their monthly payments.”

According to Black Knight, there are now 2.05M loans in some stage of delinquency, including active foreclosures down 236K from the same time last year and the lowest year-end volume since the turn of the century. The strongest declines were primarily in the east and southern portions of the country and in areas heavily impacted by the 2017 and 2018 hurricane seasons.

Nationally, foreclosure rates fell 1.57%, and delinquencies declined by over 12%.