In its 2nd quarter Foreclosure
Prevention and Refinance Report the Federal Housing Finance Agency (FHFA)
says it has helped almost 4.7 million distressed homeowners since it became
conservator of the GSEs Fannie Mae and Freddie Mac in August 2008. Over 250,000
of them took place in the second quarter of this year as the pandemic caused
millions of job layoffs.
The 12-year record of homeowner assistance
includes helping 3.99 million homeowners stay in their homes and completion of 2.42
million loan modifications. For 2020 through the end of the second quarter the
GSEs completed 30,764 loan modifications, 38 percent of which were on loans originated
prior to 2009. Sixty-five percent of
this year’s mods were extend-term only.
FHFA said increases in home prices over
the last few years have increased home equity even for delinquent borrowers,
influencing the modification type. Interest rate reductions are generally
offered to borrowers with little or no equity. This has contributed to lower
concessions as reflected in the size of payment change. More than half (57
percent) of loans modified in the fourth quarter of 2019 were current and
performing six months later.
Forbearance plans have been utilized
especially heavily since the beginning of March. The number of homeowners in
these plans jumped from 170,533 in the first quarter of the year to 1.512 million
in the second. There were also 922 short sales and deeds-in-lieu, bringing the 12-year
total to just under 700,000.
Short-term delinquencies (30 to 59 days)
did not change much during the quarter; the rate was 1.42 percent, but the 60
day plus delinquency rate jumped from .92 percent at the end of Q1 to 4.08
percent at the end of the current reporting period, the highest rate since Q2
2012. The serious (90 days or more) delinquency rate rose to 2.58 percent for
GSE loans compared to 7.96 percent for FHA and 2.98 percent for VA loans. The
industry average was 4.26 percent.
California has the highest number of
seriously delinquent loans, followed by Florida and New York. Approximately 35
percent of GSE delinquent loans had missed three or more payments by the end of
There are still a few judicial review states
with extremely aged delinquencies of at least a year. In New York 1,910 of the
state’s 7,600 aged loans are more than 72 months past due. In Florida it is 777
of a 5,832 total. Of all the GSEs deeply delinquent loans 41 percent are in those
two states plus Illinois, New Jersey, and Pennsylvania, all of which use
judicial review. Twenty-five percent of those have been delinquent for six years
Foreclosure starts for GSE loans were down
74 percent during the quarter to 7,551 and third-party and foreclosure sales
fell 87 percent to 1,028. Both declines were due the foreclosure moratorium.
The REO inventories of the GSEs dropped 24
percent to 15,487 quarter-over-quarter. The total number of property
acquisitions declined 87 percent to 660 as foreclosures were suspended.
Dispositions were down 21 percent, but the GSEs still disposed of 5,464 properties
during the second quarter.
Refinancing activity for the GSEs was the
highest since 2013 as interest rates dropped. There were 1.522 million loans
refinanced in the second quarter, more than double the number (747,463) in Q1.
Twenty-seven percent of refinances were cash-out, down 1 percentage point from
the previous quarter.
The percentage of refinances into 15-year
term mortgages increased to 25 percent in May, more than in other recent
months, but below the levels when the difference in 15- and 30-year rates was