Fannie, Freddie foreclosure starts spike
Prevention efforts grow at slower pace
By Inman News, Tuesday, June 23, 2009.A new report shows foreclosure starts among the 30.4 million first-lien residential mortgages owned or guaranteed by Fannie Mae and Freddie Mac -- most of them prime loans -- jumped 63 percent during the first three months of the year, to 243,800.
The sharp increase in the number of homes entering the foreclosure process compared to the previous quarter outpaced the 20 percent increase in foreclosure prevention actions by Fannie and Freddie's 3,000 loan servicers. Those actions, including loan modifications, forbearance and repayment plans, and short sales, totaled 87,000.
Fannie Mae and Freddie Mac own or guarantee 56 percent of outstanding mortgages, and about 84 percent of them are considered prime loans. The 151,600 foreclosure starts on prime borrowers in the first quarter of 2009 represented a 260 percent increase from a year ago, while foreclosure starts on nonprime borrowers nearly doubled, to 92,200.
Completed foreclosure sales and third-party sales were also up 17 percent from the fourth quarter of 2008, to 41,800, despite a temporary suspension of foreclosure sales on owner-occupied properties in effect during parts of the quarter.
In announcing the release of the latest quarterly report on Fannie and Freddie's foreclosure prevention efforts, the Federal Housing Finance Agency emphasized a 57 percent increase in loan modifications from the fourth quarter of 2008 to the first quarter of 2009, to 37,300.
FHFA also noted that the Obama administration's Making Home Affordable loan modification and refinance programs were still in development in March, the final month covered in the report.
The percentage of loans 60 days or more past due, however, continued to climb, reaching 3.6 percent by the end of the first quarter, up from 3 percent the previous quarter and 1.5 percent a year ago. That compares with a 9.2 percent industry average, and 10.2 percent for loans backed by the Federal Housing Administration (FHA). ...CONTINUED
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Submitted by Jon Astaris on June 23, 2009 - 1:43pm.
1st quarter '09:
151,000 Fannie/Freddie foreclosure starts
42,000 foreclosures completed
1.09 million of 30.4 million first lien mortgages 60 days or more in default.
37,000 Fannie/Freddie loan mods in the 1st quarter '09.
of which TWO THIRDS will be deninquent again within six months.
The rest of the industry has a delinquency rate of over 16%.
There are a total of FIVE MILLION delinquencies 60 days plus.
Most of those will never be cured, which means foreclosures.
Eight thousand short sales in one quarter is a drop in the bucket.
Those numbers don't reflect the exploding unemployment rates of the last few months. Just a continuation at the current pace will produce at least ANOTHER 5 million delinquencies before the end of the year.
In the face of the tragedy that clearly still remains to be played out, the Recovery drum being beat by the Propaganda Ministry is a cruel, morbid joke.
Submitted by Matt Carter on June 23, 2009 - 1:53pm.
One interesting trend here is that the number of short sales relative to foreclosures has picked up significantly. Last year, Fannie and Freddie were repossessing about eight homes for every short sale they conducted (145,183 homes repossessed vs 16,718 short sales in 2008 -- see story). In the first three months of this year, Fannie and Freddie's loan servicers took back 39,362 homes, while conducting 8,054 short sales -- a roughly 5:1 ratio. But Fannie and Freddie may see their real estate owned (REO) inventories rise during the rest of the year. In its last quarterly report to investors, Fannie Mae said it was able to trim its inventory of REO properties by about 1,167 homes during the first quarter. The company acquired 25,374 homes through foreclosure, and sold slightly more -- 26,541. That left Fannie in possession of 62,371 homes at the end of March, up from 33,729 at the beginning of 2008. The company warns that it expects to see a rise in foreclosures for the rest of the year: "Although we have expanded our loan workout initiatives to keep borrowers in their homes, we expect our foreclosures to increase in 2009 as result of the adverse impact that the severe economic downturn and sharp rise in unemployment has had and is expected to have on the financial condition of borrowers." Freddie Mac reported REO inventory of 29,151 homes at the end of March, a reduction of 195 homes, after acquiring 13,988 homes and disposing of 14,184 during the period. The company warns that it expects growth in REO inventory to resume in 2009: "Our temporary suspension of foreclosure transfers on occupied homes from November 26, 2008 through January 31, 2009 and from February 14, 2009 through March 6, 2009 caused a decrease in the growth of acquisitions in REO inventory during the first quarter of 2009. On March 7, 2009, we suspended foreclosure transfers of owner-occupied homes where the borrower may be eligible to receive a loan modification under the MHA Program; however, we expect the growth of our REO inventory to resume during 2009. In March 2009, we initiated a plan to begin leasing our REO property inventory on a month-to-month basis to qualified tenants and former owners of properties in order to provide additional time for affected families to determine their options."