FHFA saves more than 100K homes from foreclosure in Q1: report

Through their prevention efforts, Fannie Mae and Freddie Mac saved thousands of homes from mortgage foreclosure during the first quarter of 2022, according to the Federal Housing Finance Agency’s (FHFA) Foreclosure Prevention and Refinance Report.

The report shows Fannie Mae and Freddie Mac completed 129,779 foreclosure prevention actions during the first quarter. About 75% of those modifications reduced borrowers’ monthly payments by more than 20%.

This came as the number of refinances decreased as mortgage rates rose. The number of refinances fell from more than 1.26 million in the fourth quarter of 2021 to nearly 900,000 in the first quarter, according to the report.

Although mortgage refinances are becoming less common as rates rise, refinancing can still be a good way to reduce your monthly mortgage payment. Visit Credible to find your personalized mortgage rate without affecting your credit score.

HOME PRICES SURGE TO NEW RECORD HIGH IN APRIL: CORELOGIC

Delinquency rates improve in Q1

The serious delinquency rate decreased by 0.97% in the first quarter, down from 1.19% in the fourth quarter, according to the FHFA report. Homeowners with loans backed by Fannie Mae and Freddie Mac are fairing better than homeowners with other loans, such as loans backed by the Federal Housing Administration (FHA) which had a 5.33% delinquency rate, Veterans Affairs (VA) loans with a 3.15% delinquency rate and the industry average of 2.39% delinquency rate for all loans. 

Although many homeowners took advantage of forbearance options during the COVID-19 pandemic, many of these forbearance periods are coming to an end. There were 126,758 Fannie Mae and Freddie Mac-backed mortgage loans in forbearance at the end of the first quarter. That's down from 178,019 mortgage loans at the end of the fourth quarter of 2021. More forbearance periods could soon expire since about 18% of loans in forbearance have been there for more than 12 months. 

Because the foreclosure ban expired at the end of 2021, the number of foreclosure starts more than tripled to 20,624 in the first quarter of this year, according to the report.

If you are struggling with your mortgage payments, consider refinancing your loan to help reduce your payment amount. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.

HERE ARE THE BEST DAYS OF THE YEAR TO SELL YOUR HOME

What to do if you are struggling to make mortgage payments

If you are struggling to make your monthly mortgage payments on time, there are several options available through private and government avenues. Here are a few actions homeowners could take to help prevent foreclosures or falling into delinquency:

Apply for mortgage forbearance

Because of the unprecedented strain brought on by the COVID-19 pandemic, those affected have the option to enter into a forbearance plan. For loans backed by Fannie Mae, Freddie Mac, the FHA or another government agency, servicers are required to allow affected homeowners to enter forbearance without submitting any additional documentation to qualify. 

Forbearance puts their mortgage payments on pause without any extra fees, penalties or added interest. After the forbearance period ends, homeowners will have several options for making up the missed payments including a repayment plan, paying it back in one lump sum or even just adding the payments on to the end of their loan period. Homeowners interested in this option should contact their servicer. 

Sell your home

Home prices are rising at record highs, with growth recently hitting yet another new all-time high. With home price growth at more than 20% annually, even homeowners who are struggling to meet their monthly payment can sell the home, often for a profit. While this solution may not be ideal, fewer homeowners are at risk of a foreclosure as home values continue to rise. 

Mortgage refinance

Any borrower can reduce their payments through a mortgage refinance. Borrowers can lower their interest rate, or even refinance to remove their private mortgage insurance (PMI) which is added to loans where the borrower does not own at least 20% equity in the home. For conventional loans, this PMI payment can be removed by simply calling the servicer and following their steps. But FHA mortgages will need to be refinanced into a conventional loan in order to remove the PMI. 

If you are interested in seeing how much you could save through a mortgage refinance, contact Credible to speak to a home loan expert and get all of your questions answered.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.