The Federal Housing Finance Agency is seeing significant improvement in the quality of new business at Fannie Mae and Freddie Mac as a result of tighter underwriting standards promulgated by the two.
Moreover, FHFA chief Edward DeMarco said when it comes to loss mitigation efforts, the GSEs are making inroads, thanks to "more aggressive modifications" and other foreclosure prevention activities.
"Servicers working with borrowers are being successful in curbing the volume of foreclosures even if it doesn't specifically result in a HAMP mod," he said, speaking at the Second Annual Best Practices in Loss Mitigation Conference in Dallas sponsored by SourceMedia.
"Only a small percentage of loans are quickly redefaulting," said the acting director. "Loss mitigation strategies will continue to be critical to limit the losses of Fannie and Freddie."
His comments about loan quality come six months before the Obama White House will release its blueprint for restructuring Fannie Mae and Freddie Mac, which for decades have been the main source of liquidity for half the residential loan market. Of late, the two's market share has been closer to 70%.
