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GSEs’ Foreclosures Outnumber Modifications More than 2 to 1 in Q3

For every home loan held by ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com that was modified during the third quarter, 2.3 loans were foreclosed on during the same period.


The GSEs' regulator, the ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA), released its quarterly foreclosure-prevention ""report to Congress"":http://www.fhfa.gov/webfiles/19606/3q10_fpr_final.pdf on Tuesday. The document showed that together, Fannie and Freddie initiated foreclosure on 339,000 home mortgages during the July to September timeframe. Loan modifications completed in the quarter totaled 146,500.

Foreclosure starts and completed foreclosure sales increased 23 percent compared to the previous quarter. Loan modifications declined 14 percent, with the majority of modifications completed through non-HAMP [Home Affordable Modification Program] programs.

Despite the falloff in the number of loans modified, FHFA sees improvement in the companies' efforts. The regulator


says loans modified in 2010 are performing ""substantially better"" than loans modified in earlier periods. According to the report, less than 10 percent of loans modified in the last three quarters were 60-plus-days delinquent three months after modification.

FHFA points out that the performance of modified loans is driven by the size of borrowers' monthly payment reductions. More than half of the borrowers that received loan modifications in the third quarter had their monthly payments lowered by over 30 percent.

All the GSEs' foreclosure prevention actions â€" including loan mods, as well as short sales, deeds-in-lieu, repayment plans, and forbearance â€" totaled 227,300 during the quarter.

Total activity was down 16 percent from the second quarter, driven primarily by decreases in loan modifications and repayment plans. Short sales and deeds-in-lieu held steady quarter-over-quarter, at 29,500 and 1,700, respectively.

The number of loans the GSEs refinanced rose sharply in September, as mortgage rates plunged to historic lows. The two companies refinanced nearly 45,000 loans through the government's Home Affordable Refinance Program (HARP) and nearly 90,000 through other streamlined refi programs during the month.

Of the 29.9 million home loans held within Fannie Mae's and Freddie Mac's active books of business at the end of the third quarter, 2.2 million were delinquent, with nearly 1.3 million falling into the seriously delinquent bucket of 90 or more days past due or already in foreclosure.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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