Foreclosure, Delinquency Data Point Toward ‘Normal’

The Federal Housing Finance Agency’s report on fourth quarter Fannie Mae/Freddie Mac foreclosure prevention actions confirms a much-needed piece of good news for the real estate finance industry: the market is starting to look “normal” again.

FHFA reported (http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FPR_4Q2015.pdf) the number of 60+ day delinquent loans owned by Fannie Mae and Freddie Mac fell by another 3 percent during the fourth quarter to 515,420, the lowest number since first quarter 2008. The serious delinquency rate of Fannie Mae and Freddie Mac loans fell below 1.5 percent at the end of the quarter, continuing a steady decline from a peak of 4.93 percent in first quarter 2010. Fannie Mae and Freddie Mac completed 232,066 foreclosure prevention actions in 2015, including 196,815 home retention actions and 35,251 non-foreclosure home forfeiture actions.

FHFA also reported foreclosure starts decreased by 2 percent to 64,852, while third-party and foreclosure sales fell 7 percent to 25,096 in the fourth quarter. REO inventory fell 6 percent during the quarter to 72,783, as property dispositions continued to outpace property acquisitions.

It’s a trend the industry has seen magnified over the past month. In February, the Mortgage Bankers Association released its Fourth Quarter National Delinquency Survey, showing foreclosure starts falling to their lowest level since 2003. MBA reported the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.77 percent of all loans outstanding, its lowest level since third quarter 2006. The delinquency rate decreased by 22 basis points from the previous quarter and by 91 basis points from one year ago.

MBA Vice President of Industry Analysis Marina Walsh said the overall delinquency rate came in lower than the survey’s historical average of 5.2 percent between 1979 and 2015.

Last week, HOPE NOW, of which MBA is a founding member, said just 26,000 homeowners received permanent, affordable loan modifications from mortgage servicers during January, a 10 percent drop from December and well below its post-crisis peak.

Additionally, CoreLogic, Irvine, Calif., reported las month that one million borrowers regained equity in 2015, bringing the total number of mortgaged residential properties with equity at the end of the fourth quarter to 46.3 million, or 91.5 percent of all mortgaged properties.

“As the job market has improved and national home prices have rebounded, fewer borrowers were becoming seriously delinquent, while borrowers previously behind on their payments were in a better position to pursue alternative options to resolve delinquent loans,” Walsh said.

Another sign of normalcy: today’s foreclosure data have dropped lower on the media priority list. During the crisis years, release of an MBA National Delinquency Survey could typically involve a press conference call involving as many as 50 reporters. As of late, however, media interest has waned to the point where MBA simply sends out a news release. “Normal,” apparently, is not “news.”