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
The report said 9.7 percent of Fannie and Freddie’s nonprime loans were delinquent by 60 days or more. And the delinquency rate of prime loans has more than doubled in the last year, reaching 2.5 percent.
By the end of March, 1.1 million loans owned or guaranteed by Fannie and Freddie were late by 60 days or more, a 19 percent increase from the end of 2008.
The performance of mortgages modified by the 3,000 loan servicers employed by Fannie Mae and Freddie Mac was also an area of concern. The percentage of loans current six months after modification fell from 43 percent to 37 percent.
FHFA expects that more recent loan modifications will perform better, since 83 percent of loans modifications completed in the first quarter of 2009 resulted in lower payments for borrowers, compared with 16 percent in the first quarter of 2008.
Fannie and Freddie’s loan servicers also managed to boost the number of short sales by 31 percent from quarter to quarter and by 353 percent from a year ago. The number of short sales — 8,054 — represented less than one-tenth of foreclosure-prevention actions.
Last month, the Obama administration announced an expansion of the Making Home Affordable program to provide incentives for borrowers and loan servicers to engage in short sales and deeds-in-lieu of foreclosure (see story).
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