GSEs completed nearly 60,000 foreclosure prevention actions in Q1 2023: FHFA

FHFA’s Q1 2023 Foreclosure Prevention and Refinance Report details how loan modifications have reduced payments, while refinances fell again during the quarter

Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac completed 58,268 foreclosure prevention actions during the first quarter of 2023, raising the total number of homeowners who have been helped to 6,771,101 since the start of conservatorships in September 2008.

This is according to the Federal Housing Finance Agency (FHFA) Q1 2023 Foreclosure Prevention and Refinance Report, which was published late last week.

Additionally, initiated forbearance plans decreased in Q1 to 34,479, from 47,068 in Q4 2022. The total number of loans in forbearance at the end of Q1 stood at 65,757, coming out to 0.21% of the total loans serviced and 15% of delinquent loans.

Sixteen percent of home modifications in Q1 were modifications with principal forbearance, the report said. 35% of loan modifications completed in Q1 “reduced borrowers’ monthly payments by more than 20%,” the report’s findings said. “The number of refinances decreased amid rising mortgage rates from 111,251 in the fourth quarter of 2022 to 78,445 in the first quarter of 2023.”

The serious delinquency rate also decreased to 0.6% at the end of Q1, “compared with 4.01% for Federal Housing Administration (FHA) loans, 2.26% for Veterans Affairs (VA) loans, and 1.73% for all loans (industry average),” the report said.

Still, refinance transactions saw a slight uptick in Q1 despite being down overall for the quarter.

“[T]otal refinance volume increased in March 2023 as mortgage rates continued to decrease through February from the October peak of 6.90%,” the report said. “Mortgage rates rose in March: the average interest rate on a 30-year fixed-rate mortgage increased to 6.54% from a February level of 6.26%.”

The percentage of borrowers refinancing into shorter-term 15-year mortgages also increased to 14% in March, while the “average interest rate savings of a 15-year mortgage over a 30-year mortgage has been higher in 2022 and 2023 compared to previous years.”

Real-estate owned (REO) inventory also increased by 2% over the course of Q1 to 11,190 units.

“REO acquisitions outpaced property dispositions,” the report said of the change. “The total number of property acquisitions decreased slightly to 1,692, while dispositions rose 56% to 1,529 during the quarter.”

The number of foreclosure starts increased 6% during Q1 to 19,809, while third-party and foreclosure sales rose 12% to 3,700.

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