Fannie Mae and Freddie Mac Implement HAMP During Second Quarter; Trial Loan Mods Ramp Up as Completed Loan Mods Decline

Washington, DC - October 2, 2009 - (RealEstateRama) — The Federal Housing Finance Agency released its second quarter Foreclosure Prevention Report, which shows that trial loan modifications under the Administration’s Home Affordable Modification Program (HAMP) announced in March are rising steadily. This development explains why completed loan modifications have slowed. The data were released by Edward DeMarco, Acting Director of the Federal Housing Finance Agency, as part of the report for the second quarter of 2009, which now includes cumulative data from HAMP.

The FHFA report details the actions Fannie Mae and Freddie Mac have taken to prevent foreclosures and keep people in their homes. For the first time the report includes trial modification volumes from the HAMP announced in March 2009. “Fannie Mae and Freddie Mac are working with borrowers and servicers to implement the HAMP and lower mortgage payments to keep people in their homes,” said Acting Director DeMarco.

The report shows that of the Enterprises’ 30 million residential mortgages:

• Trial loan modifications under HAMP more than tripled from June to August, from 66,200 to 202,200.

• Completed actions to prevent foreclosure declined by 25 percent to approximately 58,200 during the second quarter as HAMP trial loan modifications replaced traditional loan modifications and repayment plans in process. Completed loan modifications decreased by 13 percent over the prior quarter to 32,300.

• Fifty-four percent of loan modifications completed in the second quarter resulted in borrowers’ payments decreasing by 20 percent or more, compared with only 8 percent one year earlier.

• Short sales increased by 45 percent during the second quarter to 11,700 as the pipeline of serious delinquent loans increased and Freddie Mac increased the delegated authority of servicers to implement short sales.

• As short sales increased and loan modifications declined, completed home retention actions – actions that result in a borrower keeping his or her home –accounted for 82 percent of all foreclosure prevention actions completed during the second quarter, down from 90 percent in the first quarter.

• Mortgage delinquencies continued to increase during the quarter as higher levels of unemployment contributed to new delinquencies. Foreclosure moratoria associated with HAMP have also contributed to the increase in delinquencies as fewer seriously delinquent loans are transitioning to foreclosure.

• Although the Enterprises’ mortgage delinquencies continued to increase during the second quarter of 2009, the rate of delinquency is consistently lower than the industry average. As of June 30, 2009, the percentage of Enterprises’ mortgage loans that were at least two payments past due (60 plus days delinquent) was 3.5 percent, compared with 4.7 percent for VA loans, 7.8 percent for FHA loans and 8.0 percent for the industry average.

“We expect the number of completed loan modifications to increase as homeowners complete the HAMP trial period,” said DeMarco. “Fannie Mae’s and Freddie Mac’s efforts with servicers and homeowners are critical to preventing unnecessary foreclosures and to keeping people in their homes.”

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

Contact: Corinne Russell (202) 414-6921
Stefanie Mullin (202) 414-6376

Tagged as: Fannie Mae, Freddie Mac, HAMP, Home Affordable

 

 

 

USGBC - U.S. Green Building Council

HUD - U.S. Department of Housing and Urban Development

NAR - National Association of REALTOR

RealtyTrac

FHFA - Federal Housing Finance Agency

Freddie Mac

MBA - Mortgage Bankers Association