Fannie, Freddie Foreclosure Sales Up Sharply

Both foreclosures and foreclosure prevention efforts by government-sponsored lenders jumped in February, as Fannie Mae, Freddie Mac and their kin lifted a two-month moratorium that had kept a lid on things.

Foreclosure sales at government-sponsored enterprises soared 900 percent in February, increasing to 29,000 from a little over 3,000 in January. At the same time, foreclosure preventions were up as well, led by a 26 percent increase in completed loan modifications, which rose to 12,558 in February from 9, 558 the month before.

The results were released Tuesday in the February Foreclosure Prevention Report from the Federal Housing Finance Agency (FHFA), and covers activity by government-sponsored lenders Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. All together, the 14 government sponsored enterprises (GSEs) held 30.2 million U.S. mortgages as of the end of February.

The rise in foreclosure prevention efforts came before the Administration's primary homeowner assistance program, Making Home Available, was unveiled in early March. Few lenders actually began modifying loans under that program until April or early May, so the program was not a factor in February's figures.

Loan performance continued to decline in February, as an additional 41,000 loans became 60 days or more past due, increasing to a total of 1.1 million, or 3.5 percent of all mortgages held by the GSAs.. Approximately 1 in 10 subprime loans were delinquent, the FHFA reported.

New foreclosure actions by GSAs increased modestly in February, to 80,103 up from 75,230 the month before, a 6.5 percent increase. Significantly, new foreclosure actions on subprime loans actually decreased slightly, by about 2,500 loans, meaning that all of the increase in new foreclosures was in prime loans, apparently driven by rising unemployment among those with previously good credit.

The lifting of the GSA foreclosure moratorium at the end of January was quickly followed by another that covered the last two weeks of February, which suggests that all of the pent-up momentum for foreclosure actions may not have been released. If so, when the March numbers come out next month, they could show another big month for foreclosure actions.