Regulator Sees Big Jump in GSE Loan Modifications
Washington-Modifications of loans owned or guaranteed by Fannie Mae and Freddie Mac were up 50% in the first two months after regulators seized control of the government-sponsored enterprises.
The Federal Housing Finance Agency said mortgage servicers modified 5,600 GSE loans in October and 8,291 in November. The November figure was 68% higher than the monthly average for the previous 10 months of 2008.
The FHFA also measures the "loss mitigation ratio," which rose to its highest level since June. In November, total loss mitigation activities, including payment plans, delinquency advances, loan modifications, short sales, deeds-in-lieu, assumptions and charge-offs, represented 61.7% of total loss mitigation activities plus foreclosures and third-party sales. However, the FHFA also found that serious delinquencies in the Fannie and Freddie portfolios are still rising. In November, 1.88% of the GSEs' loans were 90 days or more past due.
But foreclosure starts dropped late last year, possibly reflecting increased loss mitigation efforts. FHFA director James Lockhart noted that a foreclosure moratorium implemented by the GSEs only affected two business days in November but may have a big impact on December and January data.