Permanent loan modifications rose 4.7% in April even as overall foreclosure-prevention activity by Fannie Mae and Freddie Mac slowed, according to the Federal Housing Finance Agency’s Foreclosure Prevention, Refinance, and Federal Property Manager’s Report, published July 30. The shift comes as the government-sponsored enterprises transition toward shorter allowable forbearance periods and greater reliance on loan modifications to keep struggling borrowers in their homes.
The two mortgage giants completed 17,201 foreclosure-prevention actions in April, an 8.7% drop from March’s 18,835, driven mainly by fewer forbearance plans, repayment plans and payment deferrals. Within that total, permanent loan modifications climbed to 7,484 from a lower March figure β the one category of assistance that grew even as the broader total fell. Since the FHFA placed Fannie Mae and Freddie Mac into conservatorship in September 2008, the enterprises have completed 7,394,446 foreclosure-prevention actions, of which roughly 38.6% have been permanent loan modifications, totaling 2,857,741 to date.
Of April’s permanent modifications, 36.6% extended the loan term only, while 62.0% included principal forbearance, in which a portion of the unpaid balance is set aside without interest and repaid only when the loan is paid off, refinanced or the home is sold. That mix suggests servicers are increasingly using forbearance-based modifications, which lower monthly payments without necessarily reducing what borrowers ultimately owe, to help homeowners stay current.
Payment deferrals following forbearance periods declined to 5,729 in April from 6,537 in March, while newly initiated forbearance plans rose to 9,395 from 8,913. At month’s end, 37,517 loans remained in forbearance β 0.12% of all loans serviced by Fannie Mae and Freddie Mac, but 7.10% of loans that were delinquent, indicating forbearance remains concentrated among borrowers already behind on payments.
Delinquency rates stayed low by historical standards. The 30-to-59-day delinquency rate was 0.94% in April, while the serious delinquency rate β loans 90 or more days past due β held at 0.58%. Foreclosure starts fell 2.7% to 8,169, while completed third-party and foreclosure sales rose 3.2% to 1,325. Both figures remain far below the elevated levels seen during the foreclosure crisis that followed the 2008 financial crisis, when Fannie Mae and Freddie Mac were first placed into conservatorship.
The report also tracked refinance activity: the average rate on a 30-year fixed mortgage rose to 6.33% in April from 6.18% in March, and cash-out refinances made up 33.0% of total refinance activity, as homeowners with substantial equity continued tapping it even as rates climbed.
FHFA has overseen Fannie Mae and Freddie Mac in conservatorship since the 2008 financial crisis, and the agency periodically updates the loss-mitigation “waterfall” β the sequence of options servicers must offer struggling borrowers before pursuing foreclosure β that governs forbearance, repayment plans and modifications. The report attributes April’s shift toward permanent modifications and away from short-term forbearance and payment deferrals to an ongoing transition in that policy framework, which is narrowing the window borrowers can spend in temporary forbearance before servicers must move them into a longer-term repayment solution.
What it means
The data show a mortgage market that remains broadly healthy β delinquency rates near historic lows and foreclosure starts falling β but where the composition of assistance is shifting as policy changes take hold. The rise in permanent modifications alongside a decline in short-term forbearance and payment-deferral options suggests the GSEs are moving borrowers who need ongoing help into longer-term fixes rather than temporary payment pauses, consistent with FHFA’s stated push toward shorter forbearance windows. That’s a different signal than the recent ATTOM finding that U.S. foreclosure filings climbed 21% β this report covers only Fannie Mae- and Freddie Mac-backed loans, a narrower and generally lower-risk slice of the market than the broader foreclosure-filing data captures.
