Report reveals Fannie Mae and Freddie Mac's mortgage performance in Q4

Fannie Mae and Freddie Mac prevented 362,912 troubled homeowners from going through foreclosure in the fourth quarter of 2020, according to a Federal Housing Finance Agency (FHFA) report released last week.

Read more: Index forecasts surge in evictions and foreclosures

Foreclosure prevention actions

The Q4 2020 foreclosure prevention actions brought the total number of homeowners helped by the mortgage giants to 5.6 million, including 2.4 million permanent loan modifications. Around 30% of loan modifications completed in the quarter lowered borrowers’ monthly payments by more than 20%.

While the total number of forbearance plans remained above pre-pandemic levels, it continued to trend downward in the fourth quarter. Initiated forbearance plans dropped from 230,714 to 179,644 quarter over quarter. As of December 31, there were 804,559 loans in forbearance, representing approximately 2.8% of the total loans serviced and 69% of the total delinquent loans.

Mortgage performance

Fannie and Freddie also saw their serious delinquency rates fall from 3.14% to 2.78% at the end of the quarter. This compares with 11.19% for FHA loans, 5.96% for VA loans and 5.03% for all loans (industry average). 

“The 60+ days delinquency rate decreased from 3.58% at the end of the third quarter to 3.07% at the end of the fourth quarter,” FHFA wrote in the report. “The delinquency rate remained elevated as a result of the COVID-19 pandemic and the forbearance programs being offered to affected borrowers.”

Foreclosure starts were down 7% to 6,302, while third-party and foreclosure sales rose 8% to 1,933 quarter over quarter.

The GSE’s Real Estate Owned (REO) inventory plunged 16% from 11,614 to 9,739 in Q4. The total number of property acquisitions decreased from 7% to 1,141, while dispositions fell 41% to 3,017 during the quarter.