Using a mix of prevention strategies, government-sponsored enterprises Fannie Mae and Freddie Mac managed to keep more than 130,000 borrowers out of foreclosure in the first quarter, the Federal Housing Finance Agency (FHFA) reported Monday.
Since the two firms were taken over by the U.S. government in 2008, they have prevented more than 2.3 million Americans from going into foreclosure using ‘some type of home retention strategy,’ the FHFA said.
Of those, about 1.4 million ended up with permanent loan modifications.
About half of homeowners who obtained permanent loan modifications in the first quarter saw their monthly payments reduced by 30%.
In addition, more than a third of the permanent loan modifications in the first quarter included principal forbearances.
The report shows that delinquencies are also on the decline: The number of borrowers who were 60-plus days past due fell to 11% in the first quarter, reaching its lowest level since the first quarter of 2009, according to the FHFA.
Serious delinquency rates fell to 3% in the first quarter. Meanwhile, the serious delinquency rate was 8% for the Federal Housing Administration, 4.2% for Veterans Affairs and 6.4% for all loans.
The FHFA report comes on the day of the launch of its Streamlined Modification Initiative, which requires servicers to offer eligible borrowers who have missed three monthly payments a loan modification.
As of July 1, mortgage servicers must identify eligible borrowers and send them an offer letter that states the terms of the modification, including the monthly payment required for a Streamlined Modification. Upon receiving the letter, the borrower can simply submit the modified payment to begin the trial period.
The goal of the program, which ends Dec. 31, 2015, is to eliminate administrative barriers associated with document collection and evaluation.
As long as a borrower successfully completes the three-month trial period, and, in effect, makes the first three payments on time, they can then obtain a permanent modification. However, if a borrower misses one or more of the first payments, they will not be eligible for a permanent modification (although another foreclosure alternative may be available).