Loan Modifications Up 57% in Q1

A Federal Housing Finance Agency (FHFA) report released today shows that loan modifications done by Fannie Mae and Freddie Mac have increased 57 percent compared to the fourth quarter of 2008. Nearly 37,000 loan modifications have been completed in Q1 of 2009.

The FHFA regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks (“Enterprises”).

What’s interesting is that this report takes into account loan modifications under the Streamlined Modification Program started in November 2008 but does not include volumes from the Home Affordable Modification program (HAMP), which was announced and still in development in March 2009.

“The use of serious loan modifications by Fannie Mae and Freddie Mac has risen dramatically,” said FHFA Director James Lockhart. “As a result, more homeowners are seeing payments significantly reduced and fewer people will lose their homes.”

Details from the report show that since March 31, 2009, for Fannie and Freddie and the loan banks’ 30 million residential mortgages:

• Modifications represented 43 percent of all completed foreclosure prevention actions in the first quarter of 2009, up from 33 percent in the prior quarter.
• Modifications with more than 20 percent reduction in monthly payments rose from 2 percent in the first quarter of last year to 52 percent in the first quarter of this year.
• Completed actions to prevent foreclosure — including modifications, forebearance, repayment plans and other measures– rose substantially in the first quarter. Approximately 87,000 of these actions were completed in the quarter, an increase of 20 percent over the prior quarter and more than double the volume of the first quarter 2008.
• Home retention actions – actions that result in a borrower keeping his or her home – accounted for 90 percent of these actions completed during the first quarter consistent with the proportions of foreclosure prevention actions completed over the past year.
• Fannie Mae and Freddie Mac own or guarantee 56 percent of all mortgages outstanding but only 22 percent of all seriously delinquent loans.
• Although the Enterprises’ mortgage delinquencies continued to increase during the first quarter of 2009, the rate of delinquency is consistently lower than the industry average. As of March 31, 2009, the percentage of Enterprises’ mortgage loans that were at least two payments past due (60 plus days delinquent) was 3.6 percent, compared with 6.1 percent for VA loans, 10.2 percent for FHA loans and 9.2 percent for the industry average.