2012 GSE Home Retention Actions Near Half-Million Mark

The two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have completed more than 2.5 million foreclosure prevention actions since they were put into federal conservatorship in 2008.  The Federal Housing Finance Agency (FHFA) which serves as the conservator of the two companies said today in its third quarter Foreclosure Prevention Report that 1.3 million of those actions were permanent loan modifications.

During the third quarter the two GSEs completed more than 134,000 foreclosure prevention actions bringing the total for the first three quarters of 2012 to nearly 411,000.  So far this year those actions have included 302,066 home retention actions such as modifications, forbearance, and repayment plans and 108,822 home forfeitures, most of which were short sales.

During the third quarter there were a total of 96,248 home retention actions compared to 92,511 in the second quarter.  Loan modifications accounted for 62,561 of the actions compared to 59,474 in the second quarter and repayment plans for 29,572, down from 36,343.  There were 3,821 forbearance plans down compared to 5,352 in the second quarter and a scattering of charge-offs in lieu, fewer than 350 in each quarter.

Nearly 42,200 modifications in the third quarter were effected through the GSEs proprietary modification programs.  This was two thirds of the permanent loan modifications with the remaining one-third completed through the Home Affordable Modification Program (HAMP).

Short sales increased to 33,972 in the third quarter, up from 32,361 and there were 3,994 deeds-in-lieu of foreclosures compared to 4,135 for a total of 37,966 home forfeiture actions in the third quarter against 36,496 in the second.

HAMP modifications continue to perform much better than proprietary modifications.  For example, of those loans modified in the 4th quarter of 2011 79 percent of HAMP loans were current and performing nine months after modification compared to 66 percent of non-HAMP modifications.  This difference in performance has been notable at each benchmark for modifications done in every quarter since Q2 2010.  The chart below show the combined performance of all modified GSE loans.

The number of delinquent loans in the GSE portfolios has declined 9 percent from the beginning of 2012.  A substantial number of the Enterprises' delinquent borrowers have missed more than one year of mortgage payments and nearly a third (29 percent) of these borrowers are located in Florida.

Foreclosure starts rose 9 percent during the quarter while third party sales and foreclosure sales continued to decline. 

The owned real estate portfolios (REO) of the GSEs also continued to decline in the third quarter as property acquisitions declined.