GSE Loan Mods Up By More Than 50% In Q1

Posted by Orb Staff on June 24, 2009 No Comments
Categories : Mortgage Servicing

Mae and Freddie Mac modified nearly 37,000 loans during the first quarter of 2009 – an increase of 57% over the fourth quarter of 2008, according to the Federal Housing Finance Agency's (FHFA) most recent [link=http://www.fhfa.gov/webfiles/2976/1Q09_Foreclosure_Prevention_Report_Final_06-23-09.pdf][u]Foreclosure Prevention Report[/u][/link]. The report reflects loan modification volumes under the Streamlined Modification Program initiated in November 2008 but does not include volumes from the Home Affordable Modification Program (HAMP), which was still in development in March. "The use of serious loan modifications by Fannie Mae and Freddie Mac has risen dramatically," says FHFA Director James B. Lockhart. "As a result, more homeowners are seeing payments significantly reduced, and fewer people will lose their homes." Modifications with more than 20% reduction in monthly payments rose from 2% in the first quarter of last year to 52% in the first quarter of this year, the report shows. Completed foreclosure prevention actions (e.g., modifications, forbearance, repayment plans) rose substantially in the first quarter. Approximately 87,000 of these actions were completed in the quarter – an increase of 20% over the prior quarter and more than double the volume of the first quarter 2008. Home retention actions accounted for 90% of these actions. Delinquencies continued to increase in the GSEs' portfolios, though the FHFA says the rate of delinquency is lower than the industry average. As of March 31, the percentage of the GSEs' mortgages that were at least two payments past due was 3.6%, compared with 6.1% for Veterans' Affairs loans, 10.2% for Federal Housing Administration loans and 9.2% for the industry average. Serious delinquent mortgages (90-plus-days delinquent or in the process of bankruptcy or foreclosure) also increased during the first quarter. The serious delinquent rate rose to 2.8 % from 2.1% in the prior quarter and nearly tripled compared to the first quarter of 2008. "We encourage servicers to work aggressively to continue to identify borrowers who are willing and able to make affordable mortgage payments," Lockhart says. "These efforts at modifying mortgages and refinancing homeowners into safer mortgages are important elements of the stabilization of the housing market and the U.S. economy." The FHFA has also released its monthly house price index (HPI), which estimates prices fell 0.1% on a seasonally adjusted basis from March to April. The FHFA index is calculated using purchase prices of houses backing mortgages sold to or guaranteed by Fannie Mae or Freddie Mac. The agency revised the decline reported in March, from a 1.1% decline to a 1.4% decline. For the 12 months ending in April, U.S. prices fell 6.8%, the FHFA says. The U.S. index is 11.2% below its April 2007 peak. "Although monthly data are volatile, we may be starting to see signs of stabilization in prices for houses funded by conventional conforming loans, as the HPI is only down 0.3 percent for the first four months of the year," says Lockhart. For the nine Census Divisions, seasonally adjusted monthly price changes from March to April ranged from -0.7% in the West South Central Division to +1.3% in the Mountain Division. SOURC

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