The GSEs claim to have prevented more than 49,000 foreclosures in the first quarter, an increase of nearly 5,000 preventions compared to Q4, according to the Federal Housing Finance Agency’s Q1 Foreclosure Prevention Report. Unfortunately, the majority of these loans that were prevented from being foreclosed upon were held by parties that had no evidence of standing or ownership, and therefore had no right to negotiate.
According to the data, delinquencies, foreclosure starts, and REO inventories were all down in Q1, compared to Q4. Early delinquency (30-59) dropped most sharply, from more than 402,000 in Q4 to just under 318,000 in Q1. Serious delinquencies (above 90 days) dropped from just below 318,000 to almost 293,000. The number of all 60-plus days delinquent loans declined 10 percent to 377,622 at the end of the first quarter, the lowest level since 2008.
The total number of delinquent loans fell 15 percent in the first quarter of 2017. In Ohio, the number of seriously delinquent loans decreased 9 percent during the quarter. Florida’s serious delinquency rates dropped 8 percent; Texas, New Jersey, and Georgia by 7 percent. Total delinquent loans in Ohio dropped by 18 percent. Texas and Pennsylvania saw total delinquencies drop 16 percent in Q1.
The GSEs’ serious delinquency rate in Q1 fell to a flat 1 percent, which also is the lowest level since 2008. This compared with 4.0 percent for Federal Housing Administration loans, 2.1 percent for Veterans Affairs loans, and 2.8 percent for all loans (industry average).
REO inventory nationally was down 8 percent in Q1, to 44,460.
By the end of March, there were about 44,000 home retention actions overseen by the GSEs this year. In most cases, the GSE has no evidence they purchased these loans. For all of 2016, there were roughly 164,000 home retention actions. These include actions like loan modifications and repayment plans. Home foreclosure actions (short sales and deeds-in-lieu) dropped 9 percent in the first quarter of 2017 compared with the fourth quarter of 2016. There were 4,936 completed short sales and deeds-in-lieu in Q1.
The FHFA issued a statement saying, “These foreclosure alternatives help to reduce the severity of losses resulting from a borrower’s default and minimize the impact of foreclosures on borrowers, communities, and neighborhoods.” Nothing could be further from the truth. These foreclosure alternatives to not reduce the severity of the losses because people end up negotiating unfavorable terms with entities that have no proof that the trust was ever funded. Banks and the GSEs are not in the business of assisting homeowners.
Most modifications require that people negotiate with a loan servicer who has no idea who the true creditor is. Desperate homeowners end up accepting modifications where they must pay all arrears, the loan is extended beyond its original term and quite often requires a large balloon payment at the end of the modification. At Livinglies we typically see loan modifications that are economically detrimental for the homeowner. Most homeowners we counsel would be better off walking away, renting for a short amount of time, and then taking out a new government subsidized mortgage that requires a very low down payment.
There is no data to determine how many of these predatory loan modifications eventually result in default because the terms are unsustainable. It is well known that the GSE Loans originated from 2001 to 2013 are usually defective and the trusts are empty. The GSEs can pretend all they want that trillions of dollars of mortgage backed securities they sold to the Federal Reserve are collectiable and backed by real estate- but those of us who examine the documents, read the depositions and follow the money know that the entire GSE system is a facade. The GSEs are weapons of Mass Destruction for the lower and middle classes.
