More Distressed Borrowers are Keeping Their Homes

The gap is growing between the number of foreclosure prevention actions that were home retention actions and the number that were home forfeiture actions, according to FHFA’s February 2016 Foreclosure Prevention Report released Tuesday.

The increased number of home retention actions and the decline in home forfeitures is good news for families and for a housing market that is still in the process of healing nearly eight years after the crash.

According to FHFA, home retention actions outpaced forfeiture actions by nearly a 5 to 1 since the start of the conservatorships in September 2008 through the end of February 2016. During that period, Fannie Mae and Freddie Mac completed 3.03 million non-foreclosure solutions that kept families in their homes, which included loan modifications (the most common, at 1.92 million), repayment plans, forbearance plans, charge-offs-in-lieu of foreclosure, and Fannie Mae’s HomeSaver Advance program.

By comparison, during that time, the GSEs completed 644,846 non-foreclosure solutions in which the home was forfeited, including short sales and deeds-in-lieu of foreclosure.

The total of non-foreclosure solutions completed by the GSEs, which includes all home retention and forfeiture actions, was 3.674 million over the seven and a half year period from the start of the conservatorships until February 2016.

The gap has been widening between the two over the last four years. For the full year of 2013, Fannie Mae and Freddie Mac completed 341,899 home retention actions compared to 105,829 home forfeiture actions—approximately a 3 to 1 ratio. The next year, the ratio expanded to approximately 5 to 1 (254,054 compared to 53,124). In 2015, the ratio approached 6 to 1 (196,815 compared to 35,251), and for the first two months of 2016, the ratio has been more than 6 to 1 26,836 compared to 4,564).

If home forfeiture actions continue on their monthly pace from the first two months of 2016, there will be only 27,000 of them for the full year 2016.

Also indicative of a healing housing market is the fact that fewer non-foreclosure solutions have been needed since 2013 mostly due to a sustained substantial decline in delinquencies on mortgage loans in the last few years. The total number of non-foreclosure solutions (including forfeitures and retention actions) has gone from 447,728 in 2013 to 307,218 in 2014 to 232,066 in 2015. If the number continues to decline at the rate of the first two months of 2016, there will be 188,000 foreclosure prevention actions for the full year of 2016.

Click here to view the entire FHFA February 2016 Foreclosure Prevention Report.