Government mortgage financiers Freddie Mac and Fannie Mae announced separate foreclosure moratoriums today as foreclosure inventories hit an all-time high.
Fannie Mae will suspend evictions of foreclosed single-family homes and 2-4 unit properties from December 19, 2011 through January 2, 2012. Not sure if condos are included?
It should be noted that legal and administrative proceedings can continue during this period, but families living in the homes will be permitted to stay put.
Freddie Mac declared a similar eviction suspension with the same dates, and said its foreclosure lawyers would suspend evictions of occupied properties.
Similarly, it won’t affect pre- or post-foreclosure processes, so the train will keep chugging along.
I believe this is the third or fourth year that the pair has halted foreclosure evictions over the holidays. It’s a nice gesture, though it’s merely delaying the inevitable for most.
Foreclosure Inventories Hit New High
Meanwhile, the October Mortgage Monitor report released by Lender Processing Services today revealed that foreclosure inventories are on the rise.
As of the end of October, 4.29 percent of all active mortgages were part of the foreclosure pre-sale inventory.
And the average days delinquent for loans in foreclosure set a new record of 631 days since last mortgage payment.
In other words, homeowners are going two years without making a payment and still stuck in foreclosure proceedings. That’s just how backed up things are (free rent).
This can partially be attributed to judicial foreclosures, which require the slow moving courts, explaining why non-judicial foreclosure inventory is now less than half that found in the judicial states.
However, it sounds like things are speeding up some, as the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.
Loan Origination Volume Rising
Many loans originated as recently as 2009 are being refinanced as rates have fallen about a percentage point or so in that short span.
As expected, GSE (Fannie, Freddie) and FHA loans still account for the lion’s share of origination volume – nearly nine out of every 10 new mortgages.
So it sounds like we’ve still got a ways to go before things improve. With all that foreclosure inventory out there, it’s very likely home prices will continue to stumble in the near future.
The big question is how much they’ll fall, and for how long.
At the same time, with mortgage rates so low and only expected to climb higher, it’s still a relatively attractive entry point for first-time home buyers who actually want to live in houses/condos and investors who want to rent out the units they purchase.