The Federal Housing Finance Agency's (FHFA) latest report to Congress, which details homeowner assistance in the fourth quarter of 2008, shows not only a dramatic upturn in loan modification totals, but also year-high volumes of short sales and deeds-in-lieu of foreclosure.
Fannie Mae and Freddie Mac loan modifications increased 76% from the third quarter to the fourth quarter of 2008 – a statistic that FHFA Director James B. Lockhart says is indicative of loan resolution program success.
‘These data reflect that the post-conservatorship programs are starting to work to prevent foreclosures, even before the implementation of the streamlined modification program (SMP) in January," he says. "I believe that the Making Home Affordable loan modification and refinance programs, building upon Fannie Mae and Freddie Mac's SMP, should cause loan modifications to accelerate. These more aggressive modifications should help lessen redefaults and better stabilize the housing market and neighborhoods."
The impact of the enterprises' foreclosure sales and evictions suspensions announced last November caused December completed-foreclosure sales and third-party sales to decline by 77.3%, from the prior three-month average of 16,342 to 3,711. At the same time, loans that were 60+ and 90+ days delinquent increased.
When adjustments were made to account for suspensions, the month-over-month change in the delinquency rates actually decreased, FHFA reports. The month-over-month change in the 60+ days delinquency rate from October to November was 14.39%, while the month-over-month change from November to December was 9.31%.
Both short sales and deeds-in-lieu were at their highest volumes for the year, according to FHFA's report. Short sales were reported at 2,261, versus a low of 516 reported for January 2008, and the prior three-month average of 1,883. Deeds-in-lieu were reported at 234, versus a low of 62 reported for May 2008 and the prior three-month average of 159. Compared to the prior year, 2008 total loss mitigation actions averaged 18,321 monthly, which was 2.33 times the 2007 average of 7,858.