Fannie Mae, Freddie Mac foreclosures rise, delinquencies dip

More houses backing loans purchased by two government-related mortgage investors ended up in the distressed market during the first quarter, but that number would likely be larger if it hadn't been limited by home retention alternatives.

Foreclosure starts (19,809) and sales (3,700) rose by 6% and 12% on a consecutive-quarter basis, but the 60-plus day delinquency rate inched down to 0.75% from 0.84%, according to the Federal Housing Finance Agency's latest report. The serious delinquency (90-plus days late) rate also fell, slipping to 0.60% from 0.65%.

That may be in part because, while forbearance appears to be tailing off at Fannie Mae and Freddie Mac, the two government-sponsored enterprises have been giving people with long-term reductions in income other ways to make their payments manageable.

Only 0.21% of their single-family conventional book of business, representing 65,757 loans, still had forborne payments at the end of the first quarter.

Other homeowners who have remained in distress have moved on to other options like modifications. Over one-third or 35% of the struggling borrowers who received recast loan terms in the first quarter were able to cut their monthly obligation by 20% or more.

Meanwhile, real-estate owned inventory increased 2% as acquisitions outpaced depositions even through the former fell and the latter rose. Total REO inventory was 11,190 during the period, when dispositions jumped 56% to 1,529 and acquisitions numbered 1,692.

Overall, loan performance has consistently been stronger at Fannie and Freddie than at other government-related agencies that back mortgages.

The Federal Housing Administration's equivalent serious delinquency rate at the end of the first quarter was 4%. The Department of Veterans Affairs had a 2.26% serious delinquency rate at that time, and the industry average was 1.73%, according to the FHFA.