Foreclosures drop, refis double, housing reports says

  • Foreclosures drop

WASHINGTON, D.C. – Nearly 4 million financially troubled Americans were able to stay in their homes because of federal forbearance.

The Federal Housing Finance Agency (FHFA) released its second quarter 2020 Foreclosure Prevention and Refinance Report on September 24.

The report showed that Fannie Mae and Freddie Mac (“the Enterprises”) completed 254,014 foreclosure prevention actions in the second quarter of 2020, bringing to 4.685 million the number of troubled homeowners who have been helped during conservatorships. Of these actions, 3.98 million of the foreclosure prevention actions have helped troubled homeowners stay in their homes.

• Forbearance: Newly initiated forbearance increased significantly to 1.5 million in the second quarter of this year, from 170,533 in the first quarter. The total number of loans in forbearance plans at the end of the quarter was 1.39 million, representing approximately 4.95% of the total loans serviced and 90% of the total delinquent loans. A majority of the forbearance actions occurred as a result of the Enterprises’ response to COVID-19 impacts.

• Loan modifications: Of the 13,991 loan modifications completed, 41% reduced borrowers’ monthly payments by more than 20%; 66% were extend-term only; and 19% were modifications with principal forbearance.

• Foreclosure starts and sales: 1,028 third-party and foreclosure sales were completed, down 87% compared with the first quarter.

• Foreclosure starts: Decreased 74%, from 28,978 in Q1 2020 to 7,551 in Q2.

• Ref inances: Increased to 1.5 million in the second quarter, from 747,463 in the first quarter.

The Enterprises’ serious delinquency rate (90 days or more) increased to 2.58% at the end of the second quarter. This compared with 7.96% for Federal Housing Administration (FHA) loans, 3.98% for Veterans Affairs loans, and 4.26% for all loans (industry average).