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Delinquencies Down, Performance Steady in Q4

Fannie Mae and Freddie Mac completed 190,000 foreclosure prevention actions last year, the Federal Housing Finance Agency reported. A quarter of those occurred in Q4.

FHFA stated in its fourth quarter Foreclosure Prevention Report that the GSEs have completed nearly 4 million foreclosure preventions since the agencies went into conservatorship in 2008. That number includes 2 million permanent loan modifications.

Modifications with extend-term only accounted for 40 percent of all loan modifications in Q4. That’s a small dip from Q3.

FHFA attributed increases in house prices over the past couple of years to a generally increased home equity even for delinquent homeowners. This, the agency wrote, influenced the types of loan modification.

“Interest rate reductions are generally offered to borrowers with modest or no home equity,” the report stated. “This has contributed to lower concessions on loan modifications, which is reflected in the size of payment change.”

The report also found that as the reduction in payment change has decreased over the past couple of years, the level of delinquencies after modification has increased slightly.

Modifications with principal forbearance increased to 25 percent. There were 28,629 permanent loan modifications in Q4, FHFA reported. The GSEs also completed 8,800 repayment plans and 2,300 forbearance plans during the quarter.

The number of mortgages in early delinquency (30 to 59 days) rose from 385,000 to just past 402,000 from Q3 to Q4. At the same time, homes in severe delinquency (past 90 days) dropped from approximately 320,000 to almost 314,000. That’s a 1.1 percent dip and it’s the lowest rate of severe delinquency since the recession. REO inventory fell 9 percent in Q4, finishing the year at 48,380.

The number of completed short sales and deeds-in-lieu decreased 12 percent in Q4. There were 5,415 completed short sales and deeds-in-lieu in the quarter. There were also 18,347 completed third-party and foreclosure sales in the quarter. That’s a drop of 14 percent from Q3. The number of foreclosure starts increased 2 percent from 51,376 in the third quarter to 52,393 in Q4.

The share of the GSEs’ modifications with extend-term only decreased, but remained high during the fourth quarter.

About Author: Scott Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.
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