Fifty-four percent of loan modifications completed on Freddie Mac and Fannie Mae loans in the second quarter resulted in borrowers' payments decreasing by 20% or more, compared with only 8% the year before, the Federal Housing Finance Agency (FHFA) says.
In its second-quarter Foreclosure Prevention Report, the FHFA says trial modifications under the Home Affordable Modification Program (HAMP) are rising steadily, more than tripling from June to August, from
66,200 to 202,200.
Completed actions to prevent foreclosure declined by 25% 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% over the prior quarter to 32,300.
FHFA's acting director, Edward DeMarco, says he expects completed modifications to increase as borrowers finish their HAMP trial periods.
Short sales increased by 45% 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.
While 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% of all foreclosure prevention actions completed during the second quarter, down from 90% in the first quarter.