The total delinquency rate for the Fannie Mae and Freddie Mac portfolios increased nearly 100 basis points (bps) to 7.6% in the third quarter, the companies' regulator, the Federal Housing Finance Agency (FHFA), reported Friday. The FHFA also reported a 15% decline in foreclosure starts and a 39% increase in short sales and deeds-in-lieu during the quarter.
As of Sept. 30, 2009, nearly 1.6 million of the government-sponsored enterprises' (GSEs) mortgages were 60+ days delinquent – an increase of 260,300 mortgages (or nearly 20%) during the third quarter. Thirty-day delinquencies increased nearly 8% during the third quarter to 734,000.
Delinquency rates for borrowers with original credit scores of less than 660 continued to increase faster than for borrowers with credit scores of 660 or higher, the FHFA noted. The 60+ days delinquency rate of loans with credit scores at origination of less than 660 increased 240 bps during the third quarter. The 60+ days delinquency rate of higher original credit score loans increased 60 bps during the third quarter.
The GSEs' 60+ day bucket grew 80 bps, which the FHFA said could be attributed, in part, to the fact that many loans are remaining delinquent for a longer period of time before proceeding to a foreclosure sale or other liquidation. In the first three quarters of 2009, 170,500 foreclosure and third-party sales took place (or about 14% of the average 60+ days delinquent loans).
More than 405,000 trial and permanent loan modifications were executed by Fannie and Freddie under the Home Affordable Modification Program (HAMP), although the FHFA observed that conversion rates were low. As of the end of November, Fannie Mae had completed 11,700 permanent loan modifications, and Freddie Mac had completed 10,300 permanent loan modifications.
Loan modifications entered into on GSE loans, excluding HAMP trial mods, increased by 14% in the quarter.
The performance of loan modifications has improved slightly, the FHFA reported: The percentage of loans that were current six months after modification for loans modified during the first quarter of 2009 was 44%, compared with 39% of loans modified in 2008.
Similarly, loans modified in recent quarters have lower re-delinquency rates six months after modification. Approximately 34% of loans modified in the first quarter of 2009 were 60+ days delinquent six months after modifications, compared with 39% of loans modified in 2008.
Four million loans were refinanced in the first nine months of 2009, with Home Affordable Refinance Program (HARP) refis accounting for more than 155,700 of the loans. HARP grew to 9% of the total refinancing volume and August in September and increased to 9.8% in November.
SOURCE: Federal Housing Finance Agency