Loan Modification Up 57% in Q1 – FHFA

Mortgage servicers Fannie Mae and Freddie Mac granted loan modifications to over 37,000 homeowners in the first quarter of 2009, a figure 57% higher than that of late 2008.

In its latest Foreclosure Prevention Report, the Federal Housing Finance Agency (FHFA) showed that 52% of loan modification agreements resulted in reductions of over 20%, compared to a mere 2% in the last quarter.

The report also showed that about 87,000 foreclosure prevention actions (including loan modification, forbearance and repayment plans) were completed in the first quarter, a 20% increase from late 2008 and more than twice the volume from this time last year.

Delinquent mortgages were also on the rise, but the FHFA claims it is still below the industry average of 9.2%. By the end of the first quarter, 3.6% of GSE mortgages were at least two payments behind, compared to 6.1% of Veterans’ Affair and 10.2% of Federal Housing Administration (FHA) loans.

Serious delinquencies—mortgages more than 90 days overdue or already in the bankruptcy or foreclosure process—were also slightly on the rise. The numbers rose from 2.1% in the last quarter of 2008 to 2.8% in the first quarter of 2009, nearly three times the volume one year ago.

FHFA Director James B. Lockhart encourages mortgage servicers to continue working with borrowers and aggressively help those who qualify. He says that these loan modification efforts are crucial to the stabilization of both the economy and the housing market.

The figures include loan modifications granted under the Streamlined Modification Program, launched in November 2008. The figures do not include the loan modification volumes from the Home Affordable Modification Program (HAMP), as it was still in development by mid-quarter. More Loan Modification News