MReport September 2021

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M REPORT | 63 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 Fannie, Freddie's Home- Retention Actions FHFA's latest loan-performance report details refinance and loan modification steps taken to help keep borrowers out of foreclosure. I nformation released by the Federal Housing Finance Agency (FHFA) covering May show a sum of 65,243 foreclo- sure prevention actions during the 31-day period, which brings the number of such actions taken by government-sponsored enterprises Fannie Mae and Freddie Mac since the FHFA's 2008 formation to almost 6 million (5,965,347). The FHFA Foreclosure Prevention and Refinance report goes on to analyze the GSEs' mortgage loan performance over the course of the month, includ- ing an examination of delinquen- cy, COVID-19-related forbearance, and refinance data. The GSEs carried out 4,689 permanent loan modifications in May, making a total of 2,462,360 home-retention focused mortgage modifications since 2008. Some 13% of those May modifications in- volved principal forbearance, and 63% featured extended-term alone. In May, 41,832 borrowers received payment deferrals after completing a COVID-19-related forbearance plan, which is a 25% decrease from April's 55,970. And the number of forbearance plan starts decreased by 2% between April and May. The total number of Fannie and Freddie loans in forbearance decreased from 592,985 at the end of April to 540,421 at the end of May. About 1.8% of FHFA loans, in other words, remain in forbearance. About 60% of their delinquent loans are in forbearance plans. The 30-59 day delinquency rate increased to .78% of Fannie Mae and Freddie Mac-backed loans, while the serious delinquency rate decreased to 2.15% by the end of May. As mortgage rates topped 3% in March and April, May's metrics showed decreased refinance volume. Three refinances in May were completed through the High LTV Refinance Option—a special refi program run by Fannie Mae for borrowers with very little equity who want to refinance during a period of low mortgage rates, which can help to make monthly mortgage payment more affordable. So far, the GSE has processed close to 200 of these types of refis. The Freddie Mac version is called the Enhanced Relief Refinance Mortgage Program, but, according to the report, that has yet to be utilized in any significant number. About 28% of mortgagers refi- nanced into shorter term 15-year fixed rate mortgages in May as the difference between 15- and 30- year fixed rate mortgages steadily increased from the lows observed in late 2020 of 46 basis points to 70 ba- sis points in April, FHFA reported. Foreclosure filings went up in May by 9% to 2,206. Third-party foreclosure sales decreased 12% to 714. The federal foreclosure ban expired at the end of July. A surge in home prices over the past decade has created a sort-of foreclosure-prevention buffer for struggling mortgagers in the form of equity, experts have explained to DS News. Unlike the 2008 financial crisis, a time when many borrow- ers were underwater on their mortgages, borrowers who are delinquent on their mortgage payments today can tap into their equity and sell their home rather than lose it through foreclosure, CoreLogic's Frank Martell said when his company issued its equity report. "Homeowner equity has more than doubled over the past decade and has become a crucial buffer for many weathering the chal- lenges of the pandemic," he said at the time. "This reduces the likelihood of large numbers of distressed sales from homeown- ers who emerge from forbearance later in the year." The FHFA's monthly Foreclosure-Prevention and Refinance report is available in full at

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