Borrowers Look to Borrow More Time from GSEs

The Federal Housing and Finance Agency (FHFA) today released its latest Foreclosure Prevention Report, covering the month of August 2017. Released monthly, the Report tracks foreclosure prevention actions undertaken by Fannie Mae and Freddie Mac. In August 2017, the Enterprises completed 15,298 foreclosure prevention actions. That brings the grand total to nearly 4 million—3,960,367—since the Enterprises began their conservatorship in September 2008.

GSE foreclosure prevention actions as a whole increased 10 percent in August, with increases in loan modifications serving as the primary driver. Loan modifications were also up 10 percent for August.

One statistic that stands out is that the share of modifications with principal forbearance, where the lender delays foreclosure if the borrower can catch up within a given window of time, increased to 34 percent. That’s up from 30 percent in July, and up from 19 percent in January 2017.

Loan modifications which only extended the term were down in August, dropping to 46 percent. That’s compared to 47 percent in July and 44 percent back at the beginning of the year in January 2017. FHFA says the generally flat rate on extend-term only modifications is due to continuing improvements in home prices.

Short sales and deeds-in-lieu crept up by 4 percent compared to August, with a total of 1,277 for the month. That’s compared to 1,223 in July, which was down 24 percent compared with June.

The mortgage delinquency rate held mostly steady, dropping from 0.94 in July to 0.93 by the end of August. Approximately 76 percent of the borrowers who received loan modifications in August were three or months delinquent. That’s down from approximately 77 percent in July.

Third-party and foreclosure sales were up to 5,612 in August, compared to 5,117 in July. That’s still well shy of the June numbers. July saw third-party and foreclosure sales drop 14 percent, from 5,977 in June.

Foreclosure starts were also on the rise. August totaled out at 17,652, compared to 12,255 in July. That’s a noteworthy spike after foreclosure starts dropped from 13,028 in June.

There were 11,234 permanent loan modifications in August 2017. The grand total since the September 2008 beginning of conservatorship is now at just over 2 million.