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Loan Modifications Stay Steady as Short Sales Dry Up

by devteam April 3rd, 2014 | Share

The government sponsored enterprisesrn(GSEs) Fannie Mae and Freddie Mac continued active foreclosure preventionrnactivities in the fourth quarter of 2013, completing just shy of 100,000rntransactions, most of which permitted distressed borrowers to stay in theirrnhomes.  The Federal Housing FinancernAgency (FHFA), conservator and regulator of the GSEs, said today that the tworncompanies have brought the total of homeowners they have assisted since 2008 torn3.1 million, 1.6 million of whom received permanent loan modifications andrnanother 0.9 million who received other home retention assistance.</p

In 2013 the GSEs completed nearlyrn448,000 foreclosure prevention actions, 99,700 of which were in the fourthrnquarter.  The fourth quarter activityrnincluded 79,543 home retention actions (61,916 loan modifications, bothrnproprietary and through the Home Affordable Modification Program (HAMP); 15,149rnrepayment plans, 2,312 forbearance plans, and 166 charge-offs in lieu.  Total home retention actions in the previous (third)rnquarter of 2013 numbered 74,879.   Short Sales accounted for their lowest share of total prevention actions since 2009.</p

Home forfeitures numbered 20,161 duringrnthe fourth quarter compared to 25,997 in the third.  Short sales predominated with 15,440 completedrn(down from 21,803 in Q3).  The remainingrntransactions were deeds-in-lieu of foreclosure.  Over one-half million homeowners have beenrnassisted in exiting homeownership without a formal foreclosure since 2008.</p

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Approximately 31 percent of permanentrnloan modifications completed in the fourth quarter contained some measure ofrnmortgage balance forbearance.  The GSEsrnare not permitted by FHFA to permanently reduce the principal balance ofrnmortgages.  Nearly half of permanentrnmodifications reduced homeowners’ monthly payments by more than 30 percent.</p

Serious delinquencies continue to fallrnand were down by 7 percent during the quarter to a new post-crisis low of 2.4rnpercent.  Completed third-party andrnforeclosure sales also continued their downward trend in the fourth quarterrnwith a 15 percent drop.  Foreclosurernstarts were down 3 percent.</p

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The performance of modified loansrnremains strong. As of December 31, 2013, about 13 percent of loans modified inrnthe fourth quarter of 2012 had missed two or more payments, one year afterrnmodification.</p

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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