The Federal Housing Finance Agency (FHFA) released its second quarter 2024 Foreclosure Prevention and Refinance Report this week, highlighting how mortgage forebearances and serious delinquencies remain at historic lows, despite a steady rise in homeownership costs.
Foreclosure starts fell 7% to 17,339 in the second quarter, while third-party and foreclosure sales declined 7.4% to 2,944. The total number of GSE loans in forbearance at the end of the second quarter was 31,827, representing approximately 0.10% of the total loans serviced and 5.9% of the total delinquent loans in the FHFA’s portfolio.
The report also details how the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac completed 46,378 foreclosure prevention actions during the second quarter — an 8.1% increase from the first quarter and a 17.6% increase from the same period last year.
Of the actions executed, 24% were modifications with principal forbearance. Modifications that include “extend-term only” — such as reamortizing a 30-year mortgage over 40 years to lower monthly payments — accounted for 76% of all loan modifications during the second quarter. Of the loan modifications executed, 32% reduced borrowers’ monthly payments by more than 20%.
Fannie Mae and Freddie Mac completed 46,378 foreclosure prevention actions during the quarter. The Enterprises’ serious delinquency rate declined slightly from 0.51% at the end of the first quarter to 0.49% at the end of the second quarter. This compares with 3.17% for FHA loans, 2.07% for VA loans, and 1.43% for all loans, as an industry average.
Meanwhile, the number of refinances increased from 69,877 in the first quarter to 89,571 in the second quarter, a rise of 28%, despite mortgage rates rising on a quarterly basis to average 6.92% for 30-year fixed rate conforming mortgages.
That momentum only increased through the third quarter as mortgage rates continued to ease. with refinance originations accounting for 26% of total mortgage loan production in August.
The GSEs' Real Estate Owned (REO) inventory decreased 9.2% from 10,404 in the first quarter to 9,450 in the second quarter, as property dispositions outpaced acquisitions. The total number of property acquisitions decreased by 14.2% to 1,200, while dispositions rose to 2,105 during the quarter.
Refinance activity increased from 69,877 transactions in Q1 2024 to 89,571 in Q2 2024. The percentage of cash-out refinances increased to 75% in June after rising as high as 82% over the last three years. Opportunities for non-cashout borrowers to refinance at lower rates and lower their monthly payments are just starting to crop up since mortgage rates have dropped.
