Fannie, Freddie foreclosure prevention moves ebb

WASHINGTON, March 3 (Reuters) – Foreclosure prevention
actions involving Fannie Mae (FNMA.OB: Quote, Profile, Research) and Freddie Mac
(FMCC.OB: Quote, Profile, Research) fell by 8.3 percent in the fourth quarter of 2010 as
loan modifications fell sharply, the mortgage financiers’
regulator said on Thursday.

The report from the Federal Housing Finance Agency said
Fannie and Freddie took part in 208,416 completed actions to
prevent foreclosures in the October-December period of 2010,
down from 227,313 in the July-September period. It was the
second quarter for declines after Fannie/Freddie foreclosure
actions peaked in the second quarter of 2010 at about 269,000.

Completed loan modifications to cut struggling borrowers’
monthly payments fell to 119,778 in the fourth quarter from
146,507 in the prior quarter — including both those in the
Obama administration’s Home Affordable Modification Program and
those done by the private sector.

The quarterly foreclosure prevention actions reported by
FHFA also include lender forbearance and repayment plans, short
sales, deed-in-lieu transactions and other efforts involving
loans held or guaranteed by Fannie and Freddie.

For the full 2010 year, government-controlled Fannie and
Freddie participated in 946,305 such completed foreclosure
prevention actions, compared to 431,098 in 2009 and 225,540 in
2008.

FHFA said that although loan modifications have been
trending lower, those completed in the first three quarters of
2010 are seeing lower re-default rates as those in earlier
periods because more recent modifications had cut payments more
deeply. Nearly half of borrowers in the fourth quarter of 2010
saw payments fall by more than 30 percent, versus just 11
percent seeing a 30 percent-plus reduction in the fourth
quarter of 2008.

The regulator said that Fannie Mae’s and Freddie Mac’s
mortgage refinancing under an Obama administration refinancing
program rose sharply in the fourth quarter, to 621,803 from
479,894. The program allows home owners with loans up to 105
percent of their dwellings’ value to refinance to take
advantage of lower interest rates.

The regulator also said that as of Dec. 31, the percentage
of total loans serviced that were 60-plus days delinquent
ticked slightly lower to 5.01 percent in the fourth quarter,
versus 5.06 percent in the third quarter.

Foreclosure starts fell by 8.6 percent and foreclosure
sales fell by 44.2 percent in the fourth quarter as some
servicers imposed a moratorium to investigate foreclosure
processing problems.
(Reporting by David Lawder; Editing by Andrew Hay)