The Federal Housing Finance Agency (FHFA)'s activities in 2014 to achieve the strategic goal of maintaining foreclosure prevention activities and fostering resilient housing markets included HARP outreach, loss mitigation strategies, and non-performing loan sales, according to FHFA's 2014 Report to Congress released Monday.
The goal of maintaining "in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets" was one of three set forth in the 2014 Conservatorship Strategic Plan and the 2014 Conservatorship Scorecard. The other two goals were reducing taxpayer risk and building a new single-family securitization infrastructure.
"The maintain goal recognizes that a healthy housing finance market requires liquidity and access across different market segments of creditworthy borrowers, sensible and appropriate loss mitigation options when borrowers fall into economic distress, and affordable rental housing options," the report said. "These objectives are at the core of FHFA’s statutory mandates under HERA and the Emergency Economic Stabilization Act of 2008, as well as the Enterprises’ charters."
One of the things FHFA did in 2014 in the area of loss mitigation and foreclosure prevention was reviewing HARP (Home Affordable Refinance Program) for the GSEs to determine if any impediments existed to keep borrowers from participating in the program. An interactive map was released in June featuring all HARP-eligible borrowers all around the country. FHFA also attempted to leverage community leaders with HARP outreach events in Chicago, Atlanta, Detroit, and Miami, with additional events taking place in 2015 in Newark, New Jersey, and Phoenix, Arizona.
Also in 2014, FHFA and the GSEs reviewed and made enhancements to requirements for foreclosure alternatives, forbearance plans, and rate-reset notifications. Fannie Mae and Freddie Mac announced in July the expansion of home retention solutions for Standard and Streamlined modifications, enabling eligible borrowers with mark-to-market LTV ratios below 80 percent to obtain a loan modification. Also, FHFA and the GSEs reviewed and published enhancements for Servicemembers Civil Relief Act compliance.
In August 2014, Freddie Mac completed its first bulk sale of deeply delinquent, non-performing single-family residential mortgage loans to private investors. The loans in that sale, serviced by Bank of America, were three years delinquent on average and totaled about $596 million in aggregate unpaid balance.
"FHFA's expectation is that the sale of seriously delinquent loans through non-performing loan (NPL) sales will result in more favorable outcomes for borrowers, while also reducing losses to the Enterprises, and, therefore, to taxpayers," the report said.
Three more NPL sales for Freddie Mac and one for Fannie Mae followed in 2015 as the GSEs further attempt to remove single-family non-performing loans from their mortgage portfolios. FHFA and the Enterprises developed an enhanced set of guidelines to provide more favorable outcomes for borrowers, avoid foreclosure wherever possible, and tracking post-sale borrower outcomes. The new guidelines went into effect in March 2015.
Click here to see FHFA's entire 2014 Report to Congress.