Fannie Mae and Freddie Mac prevented 362,912 troubled homeowners from going through foreclosure in the fourth quarter of 2020, according to a report by the Federal Housing Finance Agency (FHFA) released last week.
Continue reading: Index forecasts increase with evictions and foreclosures
Measures to prevent foreclosures
The foreclosure prevention measures in the fourth quarter of 2020 brought the total number of homeowners supported by the mortgage giants to 5.6 million, including 2.4 million permanent loan changes. Around 30% of loan changes completed in the quarter cut borrowers’ monthly payments by more than 20%.
While the total number of forbearance plans remained above pre-pandemic levels, it continued to decline in the fourth quarter. The initiated forbearance plans fell from 230,714 in the previous quarter to 179,644. As of December 31, 804,559 loans were in forbearance, representing approximately 2.8% of total loans serviced and 69% of total loans in arrears.
Fannie and Freddie In addition, serious crime rates fell from 3.14% to 2.78% at the end of the quarter. This compares to 11.19% for FHA loan5.96% for become Loans and 5.03% for all loans (industry average).
“The 60-day failure rate decreased from 3.58% at the end of the third quarter to 3.07% at the end of the fourth quarter,” the FHFA wrote in the report. “The crime rate remained elevated due to the COVID-19 pandemic and the leniency programs offered to affected borrowers.”
Foreclosure starts declined 7% to 6,302, while third-party and foreclosures sales rose 8% quarter-over-quarter to 1,933.
GSE’s REO (Real Estate Owned) inventory decreased 16% from 11,614 to 9,739 in the fourth quarter. The total number of property acquisitions declined 7% to 1,141, while disposals in the quarter declined 41% to 3,017.