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GSE REO Inventory on the Rise in Q1

The Federal Housing Finance Agency (FHFA) has released its Q1 2023 Foreclosure Prevention and Refinance Report, showing that Fannie Mae and Freddie Mac (the GSEs) completed 58,268 foreclosure prevention actions during Q1 of 2023, raising the total number of homeowners who have been helped to 6,771,101 since the start of conservatorships in September of 2008.

The report also shows that 35% of loan modifications completed in Q1 reduced borrowers’ monthly payments by more than 20%. The number of refinances decreased amid rising mortgage rates from 111,251 in Q4 of 2022 to 78,445 in Q1 of 2023.

The GSEs’ serious delinquency rate declined slightly from 0.65% to 0.60% at the end of Q1. This compares with 4.01% for Federal Housing Administration (FHA) loans, 2.26% for Veterans Affairs (VA) loans, and 1.73% for all loans (industry average).

Other highlights from the FHFA’s report include:

  • In terms of real estate-owned (REO) activity and REO inventory, the GSEs reported REO inventory rose 2% from 10,997 in Q4 of 2022 to 11,190 in Q3 of 2023, as REO acquisitions outpaced property dispositions. The total number of property acquisitions decreased slightly to 1,692, while dispositions rose 56% to 1,529 during Q1 2023.
  • In terms of forbearance, as of March 31, 2023, there were 65,757 loans in forbearance, representing approximately 0.21% of the GSEs’ single-family conventional book of business, down from 81,173 or 0.26% at the close of Q4 of 2022. Approximately 3% of these loans have been on a forbearance plan for more than 12 months.
  • In terms of mortgage performance, the 60-plus-day delinquency rate decreased slightly from 0.84% at the end of Q4 to 0.75% at the end of Q1 of 2023.
  • In terms of foreclosures, the number of foreclosure starts increased 6% to 19,809, while third-party and foreclosure sales rose 12% to 3,700 in Q1 of 2023.
  • The total number of GSE delinquent loans decreased in Q1 of 2023. Approximately 39% of the GSEs' troubled borrowers had missed three or more payments at the end of the quarter. California has the highest number of 90-plus days delinquent loans, followed by Florida and Texas. As of March 31, 2023, approximately 36% of the troubled borrowers in California had missed three or more monthly payments, compared with 42% in Florida and 35% in Texas.
  • Deeply delinquent loans, loans that are more than 365 days overdue, are highly concentrated in certain states that require a judicial review of foreclosure activity and two other states with higher concentrations of the GSEs’ single-family guaranty book of business. As of March 31, 2023, approximately 39% of the GSEs’ deeply delinquent loans were in three judicial states (Florida, New York, and Illinois) and two non-judicial states (California and Texas). In New York, approximately 19% of these loans have been delinquent for more than six years.

Click here to read more of the FHFA’s Q1 2023 Foreclosure Prevention and Refinance Report.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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