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FHFA prevention actions surpassed 52K in Q4 2022

The agency outlined the latest figures in its Foreclosure Prevention and Refinance Report

The Federal Housing Finance Agency (FHFA) released on Thursday its Fourth Quarter 2022 Foreclosure Prevention and Refinance Report, stating that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac completed 52,469 foreclosure prevention actions in Q4 2022.

That figure increases the total number of GSE-assisted homeowners to 6,712,833 since the start of the conservatorship in September 2008, which placed control of Fannie and Freddie with the FHFA.

According to the report, about 37% of the loan modifications completed in Q4 reduced borrowers’ monthly payments by at or over 20%. Rising rates led to a reduction in mortgage refinances during that quarter, declining to 111,251 in Q4 2022, down from 194,189 the previous quarter.

There was also a slight reduction in the serious delinquency rate from Q3 to Q4, dropping from 0.68% to 0.65% by the end of the fourth quarter. Comparatively, the serious delinquency rate for Federal Housing Administration (FHA) loans was 4.4% in Q4, the Department of Veterans Affairs (VA) loans rate was at 2.43%, and at 1.89% for all loans based on the industry average.

The report also outlines loan forbearance information for the last quarter of 2022, when there were 81,173 loans in forbearance — accounting for approximately 0.26% of the GSEs’ single-family conventional book of business. This translates to a slight uptick from 78,432 (0.25%) at the end of Q3 2022, with 3% of these loans in forbearance for 12 months or more.

The 60-plus day mortgage performance delinquency rate also saw a slight increase from Q3 to Q4, climbing from 0.83% at the end of third quarter to 0.84% at the end of the fourth quarter last year. These rates remain slightly elevated compared to pre-pandemic levels due to forbearance programs that were offered to borrowers during the pandemic, the FHFA said.

Q4 also saw an increase in foreclosure starts during Q4, which rose 8% to 18,693, though third-party and foreclosure sales dropped commensurately by 8% to 3,297 in the same period.

The GSEs’ real estate-owned (REO) inventory increased 7% from 10,251 in Q3 to 10,997 in Q4 due to REO acquisitions outpacing property dispositions. Total property acquisitions decreased 9% to 1,706 as dispositions decreased by 2% to 977 in Q4.

“Total refinance volume decreased in December 2022 as mortgage rates remained near the October peak of 6.9%,” the report states. “Mortgage rates fell in December: the average interest rate on a 30-year fixed rate mortgage decreased to 6.36% from a November level of 6.81%.”

The total percentage of borrowers who refinanced to a shorter-term, 15-year fixed-rate mortgage decreased by 9% in December. The difference between 15- and 30-year fixed-rate mortgages decreased to 0.67% in November, according to the report.

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