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FHFA Tracks GSE Foreclosure Prevention

The Federal Housing Finance Agency (FHFA) today released its fourth quarter 2019 Foreclosure Prevention and Refinance Report, which shows that Fannie Mae and Freddie Mac completed 25,930 foreclosure prevention actions in the fourth quarter of 2019, bringing the total to 4.407 million troubled homeowners who have been helped during conservatorships.

Twenty-six percent of modifications in the fourth quarter were modifications with principal forbearance. Modifications with extend-term only accounted for 65 percent of all loan modifications during the quarter.

The percentage of 60+ days delinquent loans remained unchanged at 0.96% at the end of the fourth quarter from third quarter of 2019. The Enterprises' serious (90 days or more) delinquency rate remained unchanged at 0.65% at the end of the fourth quarter. This compared with 3.47% for Federal Housing Administration (FHA) loans, 1.92 percent for Veterans Affairs (VA) loans, and 1.76% for all loans (industry average).​

The FHFA's report also covers the GSE's refinances. ​​Total refinance volume increased in December 2019 as mortgage rates rose in previous months but remained near lows last observed in 2015. Mortgage rates increased in December: the average interest rate on a 30-year fixed rate mortgage rose to 3.72% from 3.70% in November.

Foreclosure starts in February 2020 hit their lowest level on record since January 2000, according to Black Knight’s First Look at February Mortgage Data. Foreclosure starts fell 25% from January 2020, and 20% from the year prior, while the national foreclosure rate also ticked lower in February, falling to 0.45%.

“Most in the default servicing industry expect government-insured loans to be the primary source of increased foreclosure inflow in 2020, even in the absence of a widespread recession or housing downturn,” said Jesse Roth, SVP of Strategic Partnerships and Business Development with Auction.com. “That’s a rational conclusion given the rising risk profile of FHA-backed loans originated in the last five years.”

Delinquencies were up slightly from January, but remain more than 15% below last year’s levels. Prepayment activity rose by nearly 8% month-over-month as early 2020 rate declines have begun to impact refinance activity.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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