Short-term mortgage delinquencies rose after the first quarter: FHFA

The near-term performance of mortgages backed by government-sponsored enterprises wavered a little as the second quarter got underway but loss mitigation stopped some borrowers from proceeding to foreclosure.

The share of homeowners late by 30 to 59 days rose to 0.91% or 281,681 by loan count in April from 0.71% or 218,409 in March, according to a Federal Housing Finance Agency report released last week. Delinquencies, including those in this category, fell in the first quarter.

The 90- and 60-plus day delinquency rates remained relatively stable in April at 0.59% and 0.75%, respectively, while foreclosure starts fell to 17% to 5,604 from 6,732. 

The majority or 77% of financially troubled borrowers who got modifications opted for term extensions in a market where prevailing interest rates have often been higher than those at origination. Another 18% used principal forbearance.

Mortgages backed by the two GSEs the agency oversees, Fannie Mae and Freddie Mac, tend to have relatively low delinquency rates compared to other categories of loans.

Across the board, borrowers with financial troubles were leaning more heavily on state-distributed money from the Homeowner Assistance Fund in the first quarter.

Money dispensed through the fund rose 50% to $1.2 billion on a consecutive-quarter basis, in line with its goal of providing increasing support to distressed borrowers as part of the transition away from pandemic-related relief, according to a recent U.S. Treasury report.

In total, around $3.7 billion has been paid out. While most states still have the majority of their funds outside of those used for administrative purposes left to distribute, at least 14 (and two U.S. territories) have expended more than half.

Self-reported data indicates underserved populations receiving HAF funds include women, 59%; Black residents, 35%; and Latino/Hispanic households, 23%, Janis Bowdler, counselor for racial equity at the Treasury, said at the National Fair Housing Alliance's conference on Monday.

"As of March 2023, 49% of HAF assistance was delivered to very low-income homeowners – that means homeowners earning less than 50% of the area median income," Bowdler said, citing data from the Treasury report.