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October 8th, 2013

Fannie, Freddie prevent 117,088 foreclosures in second quarter

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Foreclosure Exit SignFannie Mae and Freddie Mac completed approximately 117,000 foreclosure prevention actions in the second quarter of 2013, according to the Federal Housing Finance Agency (FHFA), which released its quarterly Foreclosure Prevention Report Monday.

Loan modifications lead the way

The 117,088 actions were comprised of 59,635 loan modifications, 23,648 repayment plans, 4,221 forbearance plans, 171 charge-offs in lieu of foreclosure, 24,656 short sales and 4,757 deeds-in-lieu of foreclosure.

The modifications, repayment and forbearance plans and charge-offs helped 75 percent of the struggling homeowners manage their mortgage payments and retain their home. The short sales and deeds-in-lieu enabled 25 percent of the borrowers to avoid foreclosure, though they had to forfeit their ownership of their home.

Second quarter data

The second-quarter report also stated that:

  • One-third of the permanent loan modifications in the quarter included principal forbearance.
  • More than half of the homeowners who received a permanent loan modification in the quarter had their monthly payment reduced by more than 30 percent.
  • The number of Fannie Mae and Freddie Mac delinquent loans dropped nationally during the quarter. The decline was due primarily to a drop in seriously delinquent loans.
  • Borrowers who were more than 60s days delinquent on a Fannie Mae or Freddie Mac loan dropped 7 percent during the quarter to the lowest level since the start of conservatorship.
  • As of June 30, about 11 percent of the borrowers whose loan was modified in the third quarter of 2012 had missed two or more payments.

The bigger picture

Fannie Mae and Freddie Mac completed 247,000 foreclosure prevention actions in the first half of this year and have completed more than 2.9 million such actions since they were put into federal government conservatorship in 2008. These actions have helped approximately 2.4 million mortgage borrowers stay in their homes, FHFA said.

Fannie Mae and Freddie Mac have completed nearly 506,000 short sales and deeds-in-lieu of foreclosure since the start of the conservatorship, FHFA said.

HAMP

The report also contains some statistics that are specific to the government-sponsored Home Affordable Modification Program (HAMP).

From April 2009, when HAMP debuted, through the end of the 2013 second quarter, slightly more than 1 million borrowers began HAMP trial loan modifications. Slightly more than 592,000, or 57 percent, of those trials were made permanent, approximately 345,000 were cancelled and nearly 80,000 were disqualified.

Of the 592,000 completed permanent HAMP loan modifications, approximately 432,000, or 73 percent, were still active at the end of the 2013 second quarter. Approximately 147,000 had subsequently defaulted and 12,819 had been paid off.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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