WASHINGTON — The good news is that 99% of the loans backed by Fannie Mae and Freddie Mac are performing well. The bad news is that 1% of the loans are 90 days or more past due, according to a report issued by the Federal Housing Finance Agency.
The 30-page report–a first of its kind from the GSEs–details data on 30.4 million first-lien residential mortgages with outstanding balances totaling $4.4 trillion serviced on behalf of Freddie Mae and Fannie Mae from 2007 through first-quarter 2008. The report focuses on the delinquencies, loss-mitigation actions and foreclosure data reported by more than 3,000 approved servicers.
A total of 302,593 mortgages are in the seriously delinquent category of 90 days or more past due.
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The combined portfolios of the two mortgage finance companies had a FICO score of 722. Eighty-three percent of the mortgages were classified as prime. Seventeen percent were nonprime.
A nonprime mortgage is a mortgage with either a FICO score less than 660 or with no FICO score at origination. FHFA noted that others in the industry would classify the loans as Alt-A, subprime or other.
As of March 31, 2008, 98.83% of the loans were current or less than 60 days delinquent. More than sixty-days delinquent mortgages in the total portfolios was 1.17%. The proportion of 60-plus-days delinquent prime mortgages was at 0.63%. The proportion of 60-plus-days delinquent nonprime mortgages was 3.74%, or six times that of prime mortgages.
Delinquencies have been rising since May 2007, FHFA noted in the report. The 60-plus-days delinquency rate increased from 1.12% at year-end 2007 to 1.17% as of March 31, 2008. The 90-plus-days delinquency rate increased from 0.85% at year-end 2007 to 1% as of March 31, 2008.
Loss-mitigation actions include a number of options–forbearance plans, payment plans, loan modifications, short sales, deeds in lieu, charge-offs in lieu of foreclosure and assumptions. Workout plans increased from a monthly average of 7,923 to 12,193 for first quarter of 2008, or 54%. Workout options for prime borrowers increased from a 2007 monthly average of 2,961 to 4,586–an increase of 1,626, or 55%. Workout options for nonprime borrowers increased from a 2007 monthly average of 4,963 to 7,606 for first-quarter of 2008–an increase of 2,644, or 53%.
Freddie Mac has increased the financial incentive it pays servicers and has put into place a mass modification program for troubled borrowers. Fannie Mae increased in July the financial incentives it pays to lenders who successfully pursue loan modification.
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