Massachusetts homeowners felt the effects of pandemic in the first half of 2020 as almost twice as many missed payments on Fannie Mae or Freddie Mac mortgages through June 30 compared to the same period last year, according to the Federal Housing Finance Agency.
The FHFA’s quarterly Foreclosure Prevention and Refinance Report showed that 33,178 Massachusetts mortgages were considered delinquent in the first six months of 2020, representing 4.9 percent of the nearly 675,000 Massachusetts single-family mortgages held by one of the government-sponsored enterprises, Fannie Mae or Freddie Mac.
Last year, 17,609 loans were considered delinquent on June 30, about 2.7 percent of the 663,430 held by the GSEs.
Most of the GSE’s delinquent loans are in forbearance. Nationwide, about 1.6 million mortgages are delinquent. In the second quarter alone, the GSEs initiated 1.5 million forbearance actions, while an additional 170,000 had been initiated in the first quarter.
The FHFA said in a statement that the majority of the forbearance actions occurred because of the GSE’s response to COVID-19 impacts. The GSEs are currently not reporting forbearance plans to credit bureaus as delinquent.
The total number of loans in forbearance plans nationwide at the end of the second quarter was 1.39 million, about 4.95 percent of the nearly 28.5 million loans serviced by the GSEs.
The GSEs also completed 13,991 loan modifications in the second quarter, with 41 percent reducing borrowers’ monthly payments by more than 20 percent.
Nationwide, GSE’s serious (90 days or more) delinquency rate was 2.58 percent at the end of the second quarter. This compared with 7.96 percent for Federal Housing Administration loans, 3.98 percent for Veterans Affairs loans, and the industry average of 4.26 percent for all loans.
In Massachusetts, 2.1 percent of GSE loans are considered serious delinquent. Last year, 0.7 percent of GSE loans were in the serious delinquent category.
The GSEs have taken 4,900 foreclosure prevention actions in Massachusetts through June 2020 compared to about 1,300 at the same time last year. More than 3,900 of those needing foreclosure prevention in Massachusetts in the first six months of 2020 were placed in forbearance plans. Nationwide, the GSEs took almost 279,000 foreclosure prevention actions through June 30, including 252,000 in the second quarter.
The pandemic has also seen homeowners take advantage of low interest rates. The FHFA said falling interest rates led to refinance volume nationwide in June 2020 at levels last observed in 2013. In total more than 1.5 million mortgages were refinanced in the second quarter nationwide, compared to about 747,000 in the first quarter.
“The percentage of cash-out refinances decreased to 27 percent in June from 28 percent in May,” the FHFA said in its report. “Mortgage rates have continued to fall, creating more opportunities for non cash-out borrowers to refinance at lower rates and lower their monthly payments.”
