FHFA Releases GSE Home Retention Metrics

The two government sponsored enterprises
(GSEs) Freddie Mac and Fannie Mae completed nearly twice as many foreclosure
prevention actions
in the first quarter outside of the Home Affordable
Modification Program as they did through it. 
According to the Federal Housing Finance Agency’s (FHFA) Foreclosure Prevention Report for the
quarter, there were 111,739 home retention actions taken by the two
companies including 60,348 loan modifications, 44,636 repayment plans, 6,245
forbearance plans and 507 charge-offs-in-lieu. 
The modification figure includes just over 31,000 transacted through

Approximately half of the loan
modifications resulted in a reduction in the borrower’s monthly payment of 30
percent or more.  FHFA has repeatedly stressed
that the larger the payment reduction the greater the chance the modification
will succeed.  Nearly all of GSE
modifications resulted in some combination of rate reduction, forbearance,
and/or term extension.  Servicers are not
allowed to do principal reductions as part of modifications of GSE loans
however FHFA said that nearly one-third of the loan modifications included
principal forbearance.

Home retention actions decreased in the
first quarter of 2012 as compared to the fourth quarter of 2011 from 120,698 to
111,739 and modifications (including those done through HAMP) were down by
almost 11,000. 

Total home forfeiture actions totaled
34,360 during the first quarter, down from 34,895 in the previous quarter.  Of this number 30,601 were short sales (down
from 31,785) and the remaining 3,759 were deeds-in-lieu of foreclosure, an
increase from 3,110.

The performance of modified loans
remains strong, especially among those modified after the first few years of
the foreclosure prevention initiatives. 
Fewer than 15 percent of loans modified in the second quarter of 2011
had missed two or more payments nine months after modification.

Delinquency rates for the GSEs continue
their slow decline.  Loans that are 30-59
days delinquent represent 1.7 percent of the portfolio down from 2.1 percent in
the previous quarter.  The 60+ day rate
is 4.2 percent, down from 4.5 percent and serious delinquencies are at 3.6
percent compared to 3.8 percent.

Delinquencies continue a wild state by
state variation.  Florida has by far the
largest number of delinquencies – over 270,000 with California not even close
at about 150,000.  Florida is also notable
for being the only state with a delinquency rate over 8 percent and for the number
of delinquent loans – 160,000 – that have been delinquent for more than one

interactive version of the map below is now available.   The new Borrower Assistance Map allows
state level access to information on delinquencies, foreclosure prevention
activities, Real Estate Owned (REO) properties and refinances for GSE

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Annual Foreclosure Rate Declines for 20th Straight Month; Nevada Gives Up Top Spot

topped 200,000 during May for the first time in two months but filings
were still below the rate a year earlier according to the U.S. Foreclosure
Market Report released by RealtyTrac this morning.  A total of 205,990 properties or one in every
639 housing units received some type of foreclosure filing during the month
compared to 188,780
in April, an increase of 9 percent.  Despite
the increase, filings were down 4 percent from May 2011 marking the 20th
straight month that year-over-year figures fell.  Judicial
states posted a 26 percent annual increase in overall foreclosure activity
while non-judicial states were down 20 percent.

RealtyTrac is an Irvine, California firm
that tracks three categories of foreclosure filings gathered from county level

    “U.S. foreclosure activity has now
    decreased on a year-over-basis for 20 straight months including May, but the
    jump in May foreclosure starts shows that it’s going to be a bumpy ride down to
    the bottom of this foreclosure cycle,” said Brandon Moore, CEO of RealtyTrac.
    “Based on the rise in pre-foreclosure sales we’ve seen so far this year, a
    higher percentage of these new foreclosure starts will likely end up as short
    sales or auction sales to third parties rather than bank repossessions going
    forward. While pre-foreclosure sales have less of a negative impact on home
    values than bank-owned sales, they still represent a discounted sale where a
    distressed homeowner is losing his or her home.

    For the first time in years Nevada
    no longer topped the nation in foreclosure activity
    , falling to third place
    with 3,755 filings, a 4 percent decrease since April and 66 percent less than a
    year earlier.  One in every 313 housing
    units in Nevada received a filing. 
    Georgia leapt into first place with a 33 percent increase in activity in
    one month and was up 30 percent from May 2011. 
    One in every 300 Georgia housing units was affected by foreclosure
    during the month.  

    Arizona’s foreclosure activity rose
    24 percent in May, putting it in second place among the states despite the fact
    its rate, one in every 305 housing units, was down 29 percent from a year

    Foreclosure starts were filed on
    109,051 U.S. properties in May, a 12 percent increase from April and a 16
    percent increase from May 2011. This was the first time in 27 months that
    foreclosure starts increased on an annual basis. Starts were up year-over-year in
    33 out of 50 states with the largest annual increases in Tennessee (165
    percent) New Jersey (118 percent), Pennsylvania (97 percent), and Florida (83
    percent).  Massachusetts, Texas, and New
    York also saw starts rise by more than 50 percent.

    After three straight monthly
    decreases to a 49-month low in April, bank repossessions (REOs) increased in
    May, rising 7 percent. Lenders completed the foreclosure process on 54,844 U.S.
    properties during the month.  This was
    still a decrease of 18 percent compared to May 2011.

    RealtyTrac attributes some of this
    to a widening acceptance among lenders of the value of pre-foreclosure
    , usually short sales where the bank accepts less than the amount it is
    owned to allow the sale of a home to a third party.  Moore said, “More banks are now recognizing
    that treating the problem of delinquent mortgages with short sales rather than
    bank repossessions can help them minimize their losses and also avoid taking on
    more REOs, which they then have to manage, maintain and market for sale.”

    “Disposing of distressed homes by
    pre-foreclosure sale can also benefit lenders and servicers because
    pre-foreclosure homes sell at a higher average price point than bank-owned
    homes,” he continued. “Our first quarter foreclosure sales report showed that
    the average price of a pre-foreclosure home was more than $27,000 higher than
    the average price of a bank-owned home – which quickly adds up given that there
    have been an average of 1.6 million nationwide foreclosure starts per year for
    the past five years.

    REO activity increased on an annual
    basis in 17 states in May, including North Carolina (66 percent), Illinois (65
    percent), and Massachusetts (59 percent). 
    There were large decreases in Nevada (68 percent), Arizona (43 percent),
    Michigan (42 percent), and Colorado (42 percent).

     Riverside California, Atlanta,
    and Phoenix had the highest foreclosure rates among the 20 largest metropolitan
    areas in the country followed by Chicago and the Tampa-St. Petersburg area in

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    HARP 2.0 Activity Surges on Interest Rates, Program Enhancements

    The new version of HARP, the Home Affordable Refinance Program, appears to be gaining in popularity judging by the quarterly figures rolled out today by the Federal Housing Finance Agency.  According to its March 2012 Refinance Report more than 180,000 homeowners refinanced through HARP 2.0 in the first quarter of 2011 compared to about 93,000 in the fourth quarter of 2011.  HARP 2.0 is only available to homeowners who have mortgages that are owned or guaranteed by Fannie Mae or Freddie Mac.

    The Refinance Report covers all refinancing activity by Fannie Mae and Freddie Mac.  Overall refinancing volume surged during the first quarter as interest rates continued to drop, week after week, to new historic lows.  The two companies refinanced a total of 1,178,419 mortgages in the first quarter compared to 1,029,610 refinances in the fourth quarter of 2012 and slightly fewer numbers in the first quarter of 2011.  Fannie Mae originated 761,922 of the first quarter total and Freddie Mac 416,497.

    HARP has been around since the first quarter of 2009, established to assist homeowners to refinance even if the value of their home had slipped below loan-to-value underwriting standards.  HARP originally had a LTV ratio limit of 105 percent, raised to 125 percent later in the year.  The program reached far fewer borrowers than the program’s designers had anticipated.  During the 11 quarters that the original program was available it exceeded 100,000 loans in only three, peaking at 142 thousand in Q4 2010. 

    Enhancements to HARP were announced last fall and rolled out in January.   The changes included completely eliminating the loan-to-value (LTV) ceiling for borrowers who chose fixed-rate loans and the elimination or lowering of fees for some borrowers. The enhanced program is commonly referred to at HARP 2.0.

    Of the 180,185 HARP loans closed during the quarter, 94,901 were with Fannie Mae and 85,284 with Freddie Mac.  The majority of the loans, 138,893, have LTV’s between 80 and 105 percent; about 37,000 have ratios between 105 and 125 percent.  Only a handful (4,434) are loans that are truly underwater with LTVs exceeding 125 percent but over half of these were in three states, California, Florida, and Arizona.  Loans with LTVs over 105 percent had the greatest percentage increase, nearly tripling (13,000 to 37,000) from the fourth quarter of 2011 to the first quarter of 2012.  Both Freddie and Fannie saw similar rates of increase.

    There were over 211,000 Streamlined Refis during the quarter; 144,300 through Fannie Mae and 66,800 through Freddie Mac.

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    FHA Loan Problems Mounted in April as Foreclosure Starts Soar 73%

    The performance of FHA loans dominates the April Mortgage Monitor report released Thursday by Lender Processing Services (LPS).  While GSE and private loans saw significant drops in foreclosure starts and portfolio loans trended down slightly, foreclosure starts for FHA loans soared, jumping 73 percent in April.  While all 2005+ vintages of FHA loans had increased numbers of starts, the increases for loans originated in 2008 and 2009 were dramatic.

    “In 2008, when the loan origination market virtually dried up, the FHA stepped in to fill the void,” explained Herb Blecher, senior vice president for LPS Applied Analytics. “FHA originations tripled that year, and increased to five times historical averages in 2009. High volumes like that, even with low default rates, can produce larger numbers of foreclosure starts. That represents a lot of loans to work through – the 2008 vintage alone represents some $14 billion of unpaid balances in foreclosure, and the overall FHA foreclosure inventory continues to rise.”

    Despite the increase in every vintage, loans originated for FHA after 2009 are performing distinctly better.  At the two year mark the delinquency rate for the 2010 vintage is 0.4 percent compared to 1.3 percent for loans originated in 2006 and 1.8 percent for the Class of 2007.

    Nationally there were 181,584 foreclosure starts recorded during April compared to 186,446 in March and 187,323 one year earlier.  The national pre-foreclosure sale rate (foreclosure inventory) was 4.14 percent, exactly the same as in March and in April 2011.   There is still a tremendous difference between the inventory in non-judicial states (2.46 percent) and that in judicial states (6.50 percent.)  The inventory for GSE, private, and portfolio loans decreased slightly during the month but those improvements were offset by a sharp jump in the FHA foreclosure inventory driven in turn by the jump in foreclosure starts.     

    Foreclosure sales continue to decrease, down 2.6 percent from March.  Sales were down 2.0 percent in non-judicial states while those in judicial states were largely unchanged.  Even those states that saw increases in foreclosure sales saw only incremental increases in terms of real numbers, and all were still far below pre-moratoria levels.

    The delinquency rate in April was 7.12 percent, up slightly from 7.09 in March but well below the 7.97 percent rate a year earlier.  The rate of seriously delinquent loans and loans in foreclosure decreased to 7.37 percent from 7.44 percent.  In April 2011 the rate was 7.86 percent.  This decrease masks the fact that the age of the delinquent loan inventory continues to increase.

    On the loan origination front, LPS reported that activity was up for the second straight month and was the highest in four months.  Non-FHA originations rose from 27.3 percent of originations in March to 30.2 percent in April and the volume of non-FHA loans with loan-to-value ratios higher than 80 percent increased from 112,000 in March to 128,000 in April.  Both increases were noted by LPS as “signs of HARP.”

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    Inside the Junk Castle home

    Castles usually evoke images of moats and drawbridges, court jesters and thrones — basically, the stuff of fairy tales. But the Junk Castle in rural Pullman, Wash., is far from anything you’ll see in a children’s story book.