Performance of Fannie, Freddie Mortgages Improves Across Most Metrics

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The Federal Housing Finance Agency’s (FHFA) first-quarter 2021 Foreclosure Prevention and Refinance Report shows that Fannie Mae and Freddie Mac completed 224,646 foreclosure prevention actions during the quarter, bringing the total number of homeowners who have been helped during conservatorships to 5,812,000.

The report also shows that 38 percent of loan modifications completed in the first quarter reduced borrowers’ monthly payments by more than 20 percent. The number of refinances increased from 2,013,000 in the fourth quarter to 2,016,000 in the first quarter.

The GSEs’ serious delinquency rate dropped from 2.78 percent to 2.48 percent at the end of the quarter. This compares with 11 percent for Federal Housing Administration (FHA) loans, 5.59 percent for Veterans Affairs (VA) loans and 4.7 percent for all loans (industry average). 

Other highlights from the report include the following:

Forbearance: The total number of loans in forbearance continued to trend downward since its peak in May as initiated forbearance plans decreased but remained elevated through the first quarter (compared with pre-pandemic levels). As of March 31, there were 660,039 loans in a forbearance plan, representing approximately 2.2 percent of the GSEs’ single-family conventional book of business, down from 804,559 (2.8 percent) at the end of the fourth quarter of 2020.

Delinquency:  The 60+ days delinquency rate decreased from 3.07 percent at the end of the fourth quarter to 2.68 percent at the end of the first quarter. The delinquency rate remained elevated as a result of the COVID-19 pandemic and the forbearance programs being offered to affected borrowers.

Foreclosures: The number of foreclosure starts rose 45 percent, from 6,302 in the fourth quarter to 9,125 in the first quarter.

REO activity and inventory: The GSEs’ REO inventory declined 12 percent, from 9,739 in the fourth quarter to 8,522 in the first quarter. The total number of property acquisitions increased 8 percent, to 1,228, while dispositions decreased 19 percent, to 2,445, during the quarter.

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