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Fannie and Freddie delinquencies, mods and foreclosures

This page is about delinquency rates at Fannie Mae and Freddie Mac, loan modifications intended to stop delinquent loans from entering foreclosure, and the rate at which homes are being forfeited. The main question on this page is the trend in forfeitures.

Summary

23 Jul 2013.

The two key facts are (1) serious delinquencies (90+ days delinquent or in foreclosure) have been dropping for several years, but (2) they remain high and will take at least another year to return to a normal level.

Fannie Mae and Freddie Mac, in their role as quasi-governmental agencies, have been under pressure throughout the crisis to increase foreclosure mitigation efforts. Nevertheless, modifications are still very small in number compared to the backlog of problem loans.

Graph

23 Jul 2013. Data through Q1 2013.

Data are from the Federal Housing Finance Agency's (FHFA) Foreclosure Prevention & Refinance Report (see Sources below). For some quarters, the number of serious delinquencies (labeled “Delinquent 90 days+”, but also including loans in foreclosure) was obtained by multiplying the percentage given in the report by the total number of loans. Forfeitures include short sales, deeds in lieu, and foreclosure sales.

Sources

See also

Below are clippings used in constructing this page

Clippings covered through 6 Jun 2011.

Freddie Mac sets up incentives for workouts

31 Jul 2008. Housing Wire.

http://www.housingwire.com/2008/07/31/freddie-mac-pushes-out-foreclosure-timelines/

“Freddie Mac Pushes Out Foreclosure Timelines. PAUL JACKSON”

““We are taking these steps because we want to reinforce the tremendous importance of workouts and reward their use,” said Freddie Mac vice president of servicing and asset management Ingrid Beckles. “Giving our servicers more time and greater compensation to help troubled borrowers is fundamental to preserving homeownership and maximizing our efforts to minimize foreclosures.” … servicers have long been compensated by the GSE for their annual performance relative to timelines. … Perhaps the boldest move by Freddie Mac on Thursday — and one that won’t get much press attention — was its decision to eliminate foreclosure timeline compensation altogether for servicers, effective immediately. In other words, servicers will no longer earn a bonus based on how quickly they can foreclose. … GSE’s decision to double compensation for servicers in completing workouts certainly will. Freddie said it will now pay servicers $800 for a loan modification, $2,200 for a short payoff or make-whole preforeclosure sale, and $500 per repayment plan. Deeds-in-lieu of foreclosure didn’t get Freddie’s same endorsement, however, and will remain at the current incentive level of $250, the GSE said. … increasing its allowable foreclosure timeline in 21 states to a whopping 300 days from last of date payment, and 150 days from initiation of foreclosure, effective on Friday. … Longer foreclosure timelines mean increased servicer advances, and given that most servicers are operating on 25 to 50 basis points in a servicing fee, pushing out reimbursement timelines means that servicers will feel the squeeze. … revised its loan modification guidelines, eliminating a prior requirement that a mortgage must not have been previously modified; the idea here is to allow servicers the ability to re-modify a previously modified loan, and signals capitulation on data showing that many previous loan modifications aren’t sticking. Freddie Mac also said it will temporarily reimburse the cost of leaving a door hanger up to $15 per mortgage, and up to $50 per mortgage for a door knocking that results in the borrower contacting their servicer — certainly good news for companies like Titanium Solutions and the servicers that use firms like them. Freddie will also reimburse servicers up to $200 for additional fees paid to vendors for door knocking if the contact made leads to a workout, the GSE said.”

[Re “whopping” see http://calculatedrisk.blogspot.com/2008/08/freddie-mac-foreclosure-timelines.html]

Modifications up

2 Oct 2008. American Banker Vol. 173, Iss. 191; pg. 9.

“Fannie and Freddie Loan Mods Well Up Since Gov't Takeover. Kate Berry”

“According to a report released by the FHFA last week, Fannie and Freddie combined offered an average of 12,193 workouts a month (including payment plans and loan modifications) in the first quarter, 54% more than the monthly average for all of last year.

Fannie and Freddie initiated 36,173 foreclosures a month in the first quarter, 60% more than last year, the report found. …

Brad German, a spokesman for Freddie, said it had completed 48,000 loan modifications or workouts by mid-September as part of a program it started in April. Freddie is on track to modify a total of 82,000 delinquent loans this year that had been headed into foreclosure, he said. Its mass modification pilot program lowers interest rates by 2 percentage points below a borrower's current rate and extends the term to 40 years.”

Fannie and Freddie Streamlined Modification Program

18 Dec 2008. Housing Wire.

http://www.housingwire.com/2008/12/18/streamlined-loan-modification-program-rolls-out/

“Streamlined Loan Modification Program Rolls Out. By DIANA GOLOBAY”

“The streamlined modification program (SMP) announced Nov. 11 has now rolled out and will allow government-sponsored entities Freddie Mac and Fannie Mae to modify large numbers of delinquent mortgage loans in an effort to prevent foreclosures, the GSEs — along with the Federal Housing Finance Agency — announced Thursday.

The SMP officially went into effect Monday and will replace several time-consuming steps in the traditional modification process with faster procedures and standard eligibility requirements, Freddie said in a press statement. The program will allow mortgage and escrow payments to be cut to 38 percent or less of an eligible borrower’s gross monthly income by either reducing mortgage rates, extending the mortgage term up to 40 years, or forbearing on a part of the principal amount until the loan matures or is paid off, at which time the borrower will be required to make a balloon payment.

“This initiative builds on Freddie Mac’s current loss mitigation efforts, which are on track to provide three out of five of our seriously delinquent borrowers with a workout this year,” said Freddie’s CEO David Moffett. …

Fannie Mae said in a separate statement that it has been working with FHFA and 27 lenders and servicers in the HOPE NOW alliance to implement the SMP. “Along with other recently announced initiatives by Fannie Mae to reach and help financially troubled borrowers earlier, including our Early Workout program, the SMP is a critical component of our company’s foreclosure prevention efforts, president and CEO Herb Allison said. “These efforts are helping more than 10,000 delinquent borrowers every month get back on track.”

Both GSEs instructed troubled borrowers to first determine their eligibility by contacting their servicers, who will already be “identifying eligible borrowers and reaching out to them through the mail.” To be eligible, borrowers must own and occupy the property as a primary residence, be delinquent at least three mortgage payments and not have filed for bankruptcy.”

Freddie announces workout plan for high-risk loans

3 Feb 2009. Freddie press release.

http://www.freddiemac.com/news/archives/servicing/2009/20090203_speciality-servicer.html

“FREDDIE MAC LAUNCHES NEW WORKOUT PLAN FOR HIGH RISK LOANS”

“Freddie Mac (NYSE:FRE) said today it is piloting a new Workout Strategy For High Risk Loans … a selected portfolio of higher risk mortgages that are at least 60 days delinquent will be given to a specialty servicer for intensive attention … Ocwen Financial Corporation (NYSE:OCN) is one of the servicers Freddie Mac has selected for the pilot. Ocwen will deploy teams of specially trained counselors to handle Freddie Mac's delinquent high risk mortgages in order to minimize telephone wait times, put borrowers in touch with live counselors faster, and implement the latest Freddie Mac foreclosure reduction policies more quickly. …

Initially, the pilot will target an estimated 5000 reduced documentation loans from California, Nevada and other states with high delinquent rates. Although Alt-A loans … represent a fraction of Freddie Mac's single family portfolio, they account for half of its seriously delinquent mortgages.”

57% of loan Fannie/Freddie loans mods made in Q1 2008 defaulted again within six months

24 Feb 2009. Bloomberg.com.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXringbcb4ps&refer=home

“Fannie, Freddie Should Relax Loan-Modification Rules, FHFA Says. By Dawn Kopecki”

“Fannie Mae and Freddie Mac have sent 90,000 letters to borrowers who have missed at least three payments, inviting them to participate in the so-called streamlined loan-modification program, since the plan was announced in November.

“Early indications are that several of the program guidelines should be liberalized to reach a broader population and to create a lower, more affordable payment,” Patrick Lawler, the chief economist of the Federal Housing Finance Agency, said in written testimony today in Washington to a House Financial Services Committee panel on housing. …

Joseph Evers, deputy comptroller at the Office of the Comptroller of the Currency, told lawmakers today that roughly 57 percent of Fannie and Freddie’s loan modifications made in the first quarter of last year defaulted again within six months of the modification.”

FHFA report

16 Mar 2009. FHFA report to Congress, on FHFA website.

http://www.fhfa.gov/webfiles/1655/fpmreport431709.pdf

“Federal Housing Finance Agency: Federal Property Managers Report NO.4”

For 2008, all numbers in thousands:

Month Foreclosure_starts 90_days+ Mods
Jan  33 277 4.2
Feb  40 288 4.9
Mar  36 304 5.5
Apr  39 320 4.0
May  38 343 4.7
Jun  40 364 6.7
Jul  48 389 4.3
Aug  44 423 4.4
Sep  41 467 4.8
Oct  47 512 6.3
Nov  44 575 8.7
Dec  59 656 8.7

The numbers are from the tables following page 5 of the report. The number of loans 90 days+ delinquent was obtained by multiplying the percentage given in the chart by the total number of loans, also given in the tables.

Modifications each month were between 13% and 25% of total workouts.

FHFA FPM 10

2 Oct 2009. FHFA report to congress.

http://www.fhfa.gov/webfiles/15091/FPM_to_Congress_No._10.pdf

“Federal Housing Finance Agency Federal Property Managers Report No.10”

[The quarterly FPM includes also the Foreclosure Prevention Report (modifications and foreclosures) and the Refinance Report (for refinancings). This one covers Fannie and Freddie data through Q2 2009.]

[Data from the tables are summarized in highlights at the top of the page. It is clear from Table 2 in the report that modifications do not include repayment plans.]

Big push on HAMP trial modifications

19 Oct 2009. FHFA press release.

http://www.fhfa.gov/webfiles/15125/JulyForeclosurePreventionRelease101909.pdf

“Fannie Mae and Freddie Mac HAMP Trial Modifications Increase More Than 40 Percent in September”

“Fannie Mae and Freddie Mac’s trial mortgage loan modifications under the Administration’s Home Affordable Modification Program (HAMP) were up more than 40 percent in September 2009 from the previous month. Completed loan modifications are also expected to increase when borrowers successfully complete the trial period and provide required documentation. The data were released by Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), as part of the agency’s monthly Foreclosure Prevention Report for July. The report summarizes mortgage delinquency and foreclosure prevention data for Fannie Mae and Freddie Mac.

Following is a summary of the foreclosure prevention data as of July 31, 2009, which includes HAMP trial modifications data through September:

Foreclosure Prevention Actions:

  • HAMP trial loan modifications in progress increased by 41 percent to 286,000 in September, from 202,200 in August.
  • Completed loan modifications declined for the fourth consecutive month to approximately 7,100 in July as servicers moved from traditional loan modifications to participate in HAMP.
  • Short sales increased by 24 percent in July to 5,500 as the pipeline of serious delinquent loans continued to increase.

Mortgage Performance:

  • Delinquencies continue to increase as approximately 74,200 more loans became 60 days or more delinquent in July. Loans 60-plus-days delinquent increased approximately 51 percent year-to-date to 1.4 million.

Foreclosures:

  • Foreclosure starts in July decreased 30 percent compared with June to nearly 85,300. HAMP requires servicers to explore alternative work-out solutions for borrowers that do not qualify for a loan modification. Loans are referred to foreclosure as a last resort.
  • Foreclosure and third-party sales increased slightly to 25,000 in July up from 24,700 in June.

Completed loan modifications are expected to increase later in the year when trial HAMP modifications complete the three-month trial period and provide all required documentation.”

FHFA 3Q2009 Report

12 Jan 2010. FHFA Third Quarter Report

http://www.fhfa.gov/webfiles/15345/3Q2009ForeclosurePreventionRefinanceRpt10810.pdf

“FHFA Foreclosure Prevention & Refinance Report, Third Quarter 2009.”

“At the end of November, a cumulative 405,700 active trial and permanent modifications were underway on Enterprise loans.”

“Loan modifications entered into on Enterprise loans, excluding HAMP trial modifications, increased by 14 percent in the third quarter over the prior quarter from 32,300 to 36,700.”

“Despite the increases in the Enterprises’ mortgage delinquencies, the Enterprises’ delinquency rates remained lower than the industry average. At the end of the third quarter of 2009, 4.2 percent of the Enterprises’ total loans serviced were seriously delinquent (90 days or more delinquent, or in the process of foreclosure). This compares with 5.1 percent for VA loans, 8.7 percent for FHA loans, and 8.9 percent for all loans (industry average).”

“Loans modified in recent quarters performed slightly better six months after modification than did earlier modifications. The percentage of loans that were current six months after modification for loans modified during the first quarter of 2009 was 44 percent, compared with 39 percent of loans modified in 2008. This represents the second consecutive quarter in which the performance of modified loans has improved.”

FHFA 1Q2010 report

22 Jun 2010. FHFA First Quarter Report.

http://www.fhfa.gov/webfiles/15860/1Q10FPR.pdf

“Foreclosure Prevention & Refinance Report First Quarter 2010”

FHFA 2Q2010 report

10 Sep 2010. FHFA Second Quarter Report.

http://www.fhfa.gov/webfiles/16687/2q10fprfinal.pdf

“Foreclosure Prevention & Refinance Report Second Quarter 2010”

FHFA 3Q2010 foreclosure prevention report

21 Dec 2010. FHFA website.

http://www.fhfa.gov/Default.aspx?Page=172.

“Foreclosure Prevention & Refinance Report Third Quarter 2010”

FHFA 4Q2010 foreclosure prevention report

1 Mar 2011. FHFA website.

http://www.fhfa.gov/Default.aspx?Page=172.

“Foreclosure Prevention & Refinance Report Fourth Quarter 2010”

FHFA 2011 Q1 foreclosure prevention report

6 Jun 2011. FHFA website.

http://www.fhfa.gov/Default.aspx?Page=172

“Foreclosure Prevention & Refinance Report First Quarter 2011”