TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1307605
62 | M REPORT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T GSEs Report Multi-Billion Dollar Q3 Earnings Representatives from Fannie Mae and Freddie Mac noted that earnings came while the GSEs also focused on "helping hundreds of thousands of families buy, rent, and remain in their homes." T he government-spon- sored enterprises (GSEs) recorded increases in their respective compre- hensive and net income levels in their newly released third-quarter earnings reports. Fannie Mae posted a net income of $4.2 billion in the third quarter, up from $2.5 billion in the second quarter and higher than the $3.9 billion during the third quarter of 2019. It also reported $4.2 billion in comprehensive income, up from $2.5 billion in the previous quarter and $3.9 billion one year earlier. Fannie Mae's single-family acquisition volume was $391.4 billion in the third quarter, an 11% increase from the second quarter. Fannie noted that the increase was primarily fueled by a $7 billion increase in refinancing volume that resulted in the highest level of refinance volumes in any quarter since Q 3 2003. However, Fannie Mae's single-family serious delinquency rate increased to 3.20% from the second quarter's 2.65% due to the large number of loans in COVID-19-related forbearances becoming seriously delinquent. The single-family serious delin- quency rate excluding loans in for- bearance was 0.65%, slightly above the second quarter's 0.59%. On the multifamily side, the guaranty book of business totaled $367 billion, up by $9 billion from the previous quarter, while the multifamily serious delinquency rate increased to 1.12% from the second quarter's 1%. The multi- family serious delinquency rate excluding loans in forbearance was 0.04% as of Sept. 30. "Our performance this year demonstrates our ability to sup- port the mortgage market in a safe and sound manner even during these uniquely challenging times, CEO Hugh R. Frater said. "To continue meeting these chal- lenges, we believe our company and the broader housing finance system would be best served by a responsible end to Fannie Mae's conservatorship, consistent with FHFA's goals." Freddie Mac announced $2.5 billion in Q 3 net income, up from $1.77 billion in the second quarter and up from $1.70 billion in the third quarter of 2019. It also re- ported $2.4 billion in comprehen- sive income, up from $1.9 billion in the previous quarter and up from $1.8 billion one year earlier. Freddie Mac reported $337 bil- lion in new single-family business activity, a 45% increase from the previous quarter. However, its new multifamily business activ- ity declined to $18 billion, down 10% from the prior quarter. On a year-over-year measurement, Freddie Mac's single-family and multifamily guarantee portfolios grew 11% and 14%, respectively. The third quarter serious delinquency rate for single-family increased to 3.04% from 2.48% in the prior quarter, due primarily to loans that were in forbearance due to the COVID-19 pandemic; 2.95% of loans in the single-family guarantee portfolio were delin- quent and in forbearance by the end of the third quarter. The multifamily delinquency rate, which does not include loans in forbearance, inched up to 0.13%. "The company delivered strong earnings on higher revenues, substantially increasing our total equity by $2.5 billion to $13.9 bil- lion—bringing us one step closer to our goal of responsibly exiting conservatorship," CEO David M. Brickman said. "We did this while helping hundreds of thou- sands of families buy, rent, and remain in their homes." FHFA Breaks Down Refi and Foreclosure-Prevention Numbers As mortgage rates keep falling, there is more opportunity for borrowers to refinance at lower rates. S ince 2008, when they entered FHFA conser- vatorship, Fannie Mae and Freddie Mac have completed a total of 4,916,088 fore- closure prevention actions. The FHFA this week published its latest numbers, which show that: The two GSEs completed 230,198 foreclosure prevention actions in July. Close to half of these actions are permanent loan modifications, FHFA reported. They undertook 4,481 permanent loan modifications in July; 18% of July modifications were modifica- tions with principal forbearance. Modifications with extend-term only accounted for 66% of loan modifications during the month. Starting in July, Fannie and Freddie offered payment deferrals to 108,492 borrowers who finished a COVID-19 related forbearance plan or who have "a confirmed but resolved COVID-19 financial hardship." Forbearance plan initiation dropped 31% from 129,855 in June to 88,989 in July. The total num- ber of loans in forbearance plans decreased from 1,398,250 at the end of June to 1,263,98 at the end of July, representing approximately 4.46% of the total loans serviced and 89% of the total delinquent loans, the FHFA reported. The GSEs reported 321 short sales and deeds-in-lieu of foreclo- sure completed in July—that is up 4% since June. Mortgage loan performances showed a drop of 1.12% in the 30-59 days delinquency rate; the serious delinquency rate increased from 2.58% at the end of June to 3.19% at the end of July. "The increase in the serious delinquency rate was as a result of the COVID-19 pandemic and the forbearance programs being offered to affected borrowers," FHFA reported. Third-party and foreclosure sales increased to 629 in July, while foreclosure starts increased slightly to 2,017 in July. As for July's refinance activ- ity, the total volume increased to levels last observed in 2009 as mortgage rates fell in previous months. Mortgage rates decreased further in July: • The average interest rate on a 30-year fixed-rate mortgage fell to 3.02% from 3.16% in June. • Thirteen refinances were com- pleted through the High LTV Refinance Option, bringing to- tal refinances through the High LTV Refinance Option from the program's inception to 83. • The percentage of cash-out refinances decreased to 25% in July from 27% in June. "Mortgage rates have continued to fall, creating more opportuni- ties for non-cash-out borrowers to refinance at lower rates and lower their monthly payments," the FHFA reported.