Seriously Delinquent GSE Loans Drop in Q3

The Federal Housing Finance Agency (FHFA) has released its third quarter 2023 Foreclosure Prevention and Refinance Report, which shows that Fannie Mae and Freddie Mac (the government-sponsored enterprises) completed 43,356 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,861,827 since the start of the GSE conservatorship in September of 2008. Of these foreclosure prevention actions, 6,157,046 have helped troubled homeowners stay in their homes, including 2,669,434 permanent loan modifications.

The Q3 2023 Foreclosure Prevention and Refinance Report shows that 33% of loan modifications completed in the third quarter reduced borrowers’ monthly payments by more than 20%. The number of refinances decreased from 93,952 in the second quarter of 2023, to 83,522 in the third quarter of 2023.

The total number of the GSEs' delinquent loans increased in the third quarter of 2023. Approximately 31% of the Enterprises' troubled borrowers had missed three or more payments at the end of the quarter. California has the highest number of 90+ days delinquent loans, followed by Florida and Texas. As of September 30, 2023, approximately 31% of the troubled borrowers in California had missed three or more monthly payments, compared with 35% in Florida and 30% in Texas.

Deeply delinquent loans (defined as loans 365+ days past due) are highly concentrated in certain states that require a judicial review of foreclosure activity and two other states with higher concentrations of the Enterprises' single-family guaranty book of business. As of September 30, 2023, approximately 35% of the Enterprises’ deeply delinquent loans were in three judicial states (Florida, New York, and New Jersey) and two non-judicial states (California and Nevada). In New York, approximately 20% of these loans have been delinquent for more than six years.

The total number of the GSEs’ delinquent loans increased 8% as early stage (30-89 day) delinquencies increased, while seriously delinquent loans (loans that have missed three or more payments or are in foreclosure) declined slightly in Q3 of 2023. The Enterprises’ 30-day delinquency rate increased to 0.93%, while the serious delinquency rate fell to 0.54 percent at the end of the quarter. In New Jersey, the total number of the Enterprises' delinquent loans increased 9%, while seriously delinquent loans dropped 6% during the quarter.

Additional highlights from the report include:

The Enterprises' Foreclosure Prevention Actions

• Initiated forbearance plans decreased to 27,038 in Q3 from 27,738 in Q2 of 2023. The total number of loans in forbearance at the end of the quarter was 47,672, representing approximately 0.15% of the total loans serviced and 9% of the total delinquent loans.
• Twenty-one percent of modifications in Q3 were modifications with principal forbearance. Modifications that include extend-term only accounted for 77% of all loan modifications during the quarter.
• There were 153 completed short sales and deeds-in-lieu during Q3, bringing the total to 704,781 since the conservatorships began in September 2008.

GSE Mortgage Performance

• The 60-plus days delinquency rate increased slightly from 0.72% at the end of Q2 to 0.73% at the end of the third quarter of 2023.
• The GSEs’ serious (90 days or more) delinquency rate fell slightly to 0.54% at the end of Q3. This compared with 3.34% for Federal Housing Administration (FHA) loans, 1.99% for Veterans Affairs (VA) loans, and 1.52% for all loans (industry average).

The GSEs’ Foreclosures

• Foreclosure starts increased 9% to 19,489, while third-party and foreclosure sales decreased 4% to 3,615 in Q3.

Refinance Activities

• Although it decreased for the overall quarter, total refinance volume increased in September 2023, but continued at a lower volume compared to the volumes observed through mid-2022, as mortgage rates increased in August. Mortgage rates rose in September: the average interest rate on a 30-year fixed rate mortgage increased to 7.20% from an August level of 7.07%.
• The percentage of borrowers refinancing into shorter term 15-year mortgages remained at 10% in September. The average interest rate savings of a 15-year mortgage over a 30-year mortgage has been higher in 2021 through 2023 compared to previous years.

Click here to read the FHFA's full 2023 Foreclosure Prevention and Refinance Report.