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GSEs Bolster Foreclosure Prevention Activities in Q4 2009

The ""Federal Housing Finance Agency"":http://www.fhfa.gov/Default.aspx (FHFA) recently released its ""Foreclosure Prevention and Refinance Report"":http://www.fhfa.gov/webfiles/15637/4q2009ForeclosurePreventionrelease.pdf, detailing the actions the government-sponsored enterprises (GSEs) have taken to prevent foreclosures and keep people in their home. The findings were positive, showing notable improvements across the board.

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According to the report, trial and permanent loan modifications initiated by Fannie Mae and Freddie Mac servicers under the administration’s Home Affordable Modification Program (HAMP) soared 75 percent during the fourth quarter of 2009 to more than 485,400. That number increased to approximately 572,700 through February 2010, of which nearly 103,700 were permanent modifications.

Refinance activity also increased. The enterprises’ refinancings through the Home Affordable Refinance Program (HARP) jumped 63 percent to 190,200 during the fourth quarter. Through February 2010, that number increased to 257,100.

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The GSEs’ total completed foreclosure prevention actions, including activity under HAMP and HARP and other foreclosure-prevention efforts, increased 38 percent in the fourth quarter. Driven by an escalation in all forms of home retention activities and short sales, the enterprises’ comopleted foreclosure prevention actions jumped to approximately 145,400.

Completed loan modifications increased 57 percent to nearly 57,600 in the fourth quarter. The majority of borrowers received a combination of rate reductions and term extensions, and approximately 60 percent of loan modifications completed lowered borrowers’ monthly payments by more than 20 percent. FHFA said this is the greatest number of borrowers to receive such high payment reductions in two years.

In addition, Fannie Mae and Freddie Mac completed approximately 46,400 repayment plans and 18,200 forbearance plans in the fourth quarter. And during the same period, more than 19,800 short sales and deeds-in-lieu were completed, an increase of 14 percent over the third quarter.

Despite the GSEs’ foreclosure prevention efforts, loans 60-plus days delinquent increased by nearly 182,400 loans or 11.5 percent during the fourth quarter to approximately 1.8 million. However, loans only one month delinquent decreased by 9,200 loans or nearly 1.3 percent during the quarter to approximately 724,600. And while foreclosure starts declined 4 percent to approximately 243,500 in the fourth quarter, foreclosure sales and third-party sales increased to 12 percent to nearly 77,900.