FHFA assisted nearly 44,000 troubled homeowners in Q4 2023

Fannie Mae and Freddie Mac completed 43,903 foreclosure prevention actions in the fourth quarter of 2023, according to a new report published by the Federal Housing Finance Agency (FHFA).

Over the course of 2023, the government-sponsored enterprises (GSEs) completed 192,897 foreclosure prevention actions. This brought the total to 6.905 million since the start of the GSE conservatorships in September 2008, the FHFA foreclosure prevention and refinance report showed.

Of these actions, 2.682 million have been permanent loan modifications and 3.519 million actions have been other forms of assistance that allowed troubled borrowers to stay in their homes. 

A total of 704,915 of the actions have been short sales and deed-in-lieu procedures, which result in borrowers leaving their homes without going through the foreclosure process. 

The number of completed short-sale and deeds-in-lieu transactions in Q4 2023 totaled 134, a decrease of 12% compared to the previous quarter.

“The foreclosure alternatives help to reduce the severity of losses resulting from a borrower’s default and minimize the impact of foreclosures on borrowers, communities and neighborhoods,” the report stated.

Loan modifications dropped from 14,363 in Q3 to 12,758 in Q4, an 11.2% decline. Of the total number of modifications, about 31% in the fourth quarter reduced a borrower’s monthly payments by more than 20%. 

Meanwhile, the 60-day delinquency rate increased to 0.77% at the end of the fourth quarter, up from 0.73% in the previous quarter. And the GSEs’ serious delinquency rate (defined as 90 or more days delinquent or loans in the process of foreclosure) marginally increased to 0.55% at the end of the fourth quarter, compared to 0.54% in Q3.

By comparison, the serious delinquency rate for Federal Housing Administration (FHA) loans was 3.42% in Q4 2023. The rate for U.S. Department of Veterans Affairs (VA) loans was 2.01% and the industrywide average for all loans was 1.52%.

The GSEs’ real estate-owned (REO) inventory decreased slightly to 10,902 in Q4, down from 11,019 in Q3 as REO dispositions outpaced acquisitions, the report noted.

The total number of REO property acquisitions declined 6% to 1,475, while disposition fell slightly to 1,567 during the fourth quarter. 

A rise in mortgage rates in the fourth quarter led total refinance volume to decline to 71,378 loans, down from 83,522 in Q3 2023. FHFA mortgage rates averaged 7.62% in October and remained elevated in November before falling to an average of 6.82% in December.

“The percentage of borrowers refinancing into shorter term 15-year mortgages continued at 8% in December. The average interest rate savings of a 15-year mortgage over a 30-year mortgage has been higher in 2021 through 2023 compared to previous years,” according to the report.