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FHFA Reports Downward Trend In Foreclosures Q2

Katie Jensen
Sep 24, 2021

The total number of loans in forbearance continues to trend downward since its latest peak in May this year.

KEY TAKEAWAYS
  • The Enterprises completed 217,020 foreclosure prevention actions in the second quarter, bringing the total number of homeowners helped during conservatorship to 6.030 million.
  • The number of forbearance starts dropped 32% to 6,233 in the second quarter, while third party and foreclosure sales fell 9% to 2,281.
  • The report shows that 47% of all loan modifications in the second quarter of 2021 reduced monthly payments by more than 20%.
  • Property dispositions continue to outpace REO acquisitions, with the total number of acquisitions dropping 2% to 1,200, and total number of dispositions dropping 25% to 1,832 during the quarter. 

The Federal Housing Finance Agency (FHFA) released its second quarter Foreclosure Prevention and Refinance Report, showing that Fannie Mae and Freddie Mac (the Enterprises) completed 217,020 foreclosure prevention actions in the second quarter, bringing the total number of homeowners helped during conservatorship to 6.030 million.

The number of forbearance starts dropped 32% to 6,233 in the second quarter, while third party and foreclosure sales fell 9% to 2,281. Meanwhile, the Enterprises’ serious delinquency rate dropped from 2.48% to 1.99% by the end of the second quarter. The delinquency rate for FHFA loans was 9.48%, for VA loans it was 5.02%, and for all industry loans the delinquency rate was 4.03%. 

The total number of loans in forbearance continues to trend downward since its latest peak in May this year, as initiated forbearance plans decreased but remained elevated throughout the second quarter compared to pre-pandemic levels. As of June 30, 2021, there were 490,508 loans in forbearance, representing 1.6% of the Enterprises' single-family conventional book of business, down from 660,039 or 2.2% at the end of the first quarter. 

The report shows that 47% of all loan modifications in the second quarter of 2021 reduced monthly payments by more than 20%. But, the number of refinances eventually began to drop off in the second quarter, from 2.016 million in the first quarter to 1.614 million in the second.

The portion of loans that are delinquent for 60 days or more dropped from 2.68% at the end of the first quarter to 2.14% at the end of the second quarter. Delinquency rates are much higher than they were pre-pandemic, mainly due to the forbearance programs offered to borrowers impacted by the pandemic. 

Additionally, in real estate owned (REO) activity and inventory, the Enterprises REO inventory fell 8% from 8,522 in the first quarter to 7,840 in the second quarter. Property dispositions continue to outpace REO acquisitions, with the total number of acquisitions dropping 2% to 1,200, and total number of dispositions dropping 25% to 1,832 during the quarter. 

The FHFA’s Foreclosure Prevention and Refinance Report includes data on the Enterprises’ delinquency rate, mortgage performance, active forbearance plans, as well as forfeitures and refinances by state.

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