After major storms, floods and Hurricanes, we always see the footage of broken houses and neighborhoods. And they always look like they’ve been crushed by a giant hand. Perhaps we try not to look too long or hard at them. Then, after 2-3 days, the media focuses on another issue. And we forget about them. But what happens when the owners face the other storms? The storms of finances usually include mortgage payments, property taxes and living expenses?
Storms Force Foreclosure Prevention Actions
It does not always mean foreclosure. Last year, Fannie Mae and Freddie Mac had a 9% increase in total foreclosure prevention actions. This came as a result of visits from Hurricanes Harvey, Irma, and Maria. These storms were reported by the Federal Housing Finance Agency.
How Freddie and Fannie Coped with the Mortgage Storms
They were able to do this because of a “2,000% increase in the number of forbearance plans offered in the fourth quarter”… Just what does that mean in terms of helping homeowners? Freddy and Fanny offered 24,935 forbearance plans to homeowners who were late on their mortgage payments. To give you an idea of the unique quality of this situation, compare it with the number of forbearance plans offered in the third quarter. Plans offered equaled only 1,212. In fact for the entire year of 2017, Fannie and Freddie offered 29,987 forbearance plans. But they only offered 7,289 for the entire year of 2016. Obviously, the three hurricane storms account for this disparity in the figures.
How Freddie and Fannie Helped With the Mortgage Storms
Freddie and Fannie helped families cope with lost or damaged homes from the hurricanes and storms. The main effort was through Loan modifications. These were not developed as giveaways or for re-locations. Freddy and Fanny designed the forbearance plans to help keep “borrowers in their homes…” Helping to keep the neighborhoods intact was important.
They explained, “Principal forbearance, along with a reduced interest rate and an extended term, was used in 42% of the modifications.” There were “42% who had an extended term only. Almost all of the remaining modifications had a reduced rate and extended term.”
Stormy Numbers Represent a Rough Season for Home Ownership
Freddie and Fannie reported several interesting facts:
- There were 30,506 repayment plans offered.
- The number of short sales and deed-in-lieu resolutions fell to 16,470 from 25,784 in 2016.
- Some GSE loans were between “30 and 59 days late on their payments”. This number fell to 438,299 at the end of the fourth quarter from 440,534 at the end of the third.
- “But the number of loans 60 days or more late increased to 458,824 on Dec. 31, 2017, from 368,182 on Sept. 30, 2017.”
- By the way, they were quick to observe, “This total included 328,845 loans that were 90 days or more delinquent or in the foreclosure process at the end of 2017, up from 246,642 three months earlier.” Palm State Mortgage adds, “That’s a big difference.”
The Results of Plans by Freddie and Fannie
Moreover, after all these arrangements were made, Freddie and Fannie ’s seriously delinquent loan rate only increased 23 basis points to 1.18% at the end of the fourth quarter. This was actually down from the third quarter.
Believe it or not, there is an unspoken competition among financial institutions. This is why Freddie and Fannie were rather delighted to announce that their 1.18 % seriously delinquent loan rate looked very good. This was especially true when compared to the 4.8% seriously delinquent loan rate of the Federal Housing Association. Likewise, they were proud to have better numbers than the Veterans Affairs-guaranteed loans. They brought in their seriously delinquent loan rate at 2.4%.
At Palm State Mortgage, we can only add that we hope the hurricanes and storms of 2018 won’t be as fierce as those of 2017. And if they are, we hope Freddie and Fannie will be in the fight to safeguard our mortgages and homes.
Thank you for reading our blog and we hope to see you here next time.