Fannie Mae, Freddie Mac modifications hit a 15-month high in 2Q

Single-family loan modifications at government-sponsored enterprises Fannie Mae and Freddie Mac rose nearly 45% between the first and second quarters of this year, rebounding to heights not seen since first-quarter 2020.

A total of more than 16,000 adjustments to loan terms made for affordability purposes were completed in the second quarter, up from over 11,000 the previous fiscal period and 14,000 a year earlier, according to a Federal Housing Finance Agency report released Friday.

The return to highs last seen just as the pandemic was getting underway shows GSE loan modifications have normalized as more people have exited forbearance plans. It also suggests that at least a small wave of mods exceeding pre-pandemic levels will follow as many single-family plans expire. 

However, these second quarter numbers also add to signs that the pandemic-related modification wave may not be historically large. At their height following the Great Recession, single-family mods at the two GSEs peaked at more than 170,000 in 2010, and the forbearance rate for loans sold to Freddie and Fannie is lower than it is for other types of single-family loans.

Single-family loans with forborne payments numbered more than 57,000 in the second quarter, down from over 71,000 in the previous fiscal period and 232,000 a year ago, according to the FHFA’s latest foreclosure prevention report.

Payment deferrals, in which borrowers exiting forbearance resume normal monthly obligations and add missing payments onto the end of their loans, exhibited slower growth in the second quarter. Single-family deferrals totaled 139,591 compared to 130,014 in the first quarter and 232,000 a year ago.