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47 » VISIT US ONLINE @ DSNEWS.COM FREDDIE MAC: LESSONS LEARNED FROM THE CRISIS e mortgage servicing industry has become stronger and more efficient in a post-crisis world due to the efforts of servicers to delegate authority to make modification decisions and to offer modifications with more favorable terms to borrowers, such as step-rate mortgages and principal forbearance, according to Yvette Gilmore, VP, Single-Family Servicer Performance Management with Freddie Mac. Gilmore stated that Treasury's Home Affordable Modification Program (HAMP) has played an important role in helping borrowers by setting industry standards to assist in a unified way. Nearly eight years after the crisis, the five lessons Gilmore said Freddie Mac has learned from the crisis are as follows: » Lower payments » Earlier borrower engagement » Reduced documentation » Simpler programs » More feedback Payment relief drives ongoing modification performance and is the biggest predictor of long-term success for borrowers, Gilmore said. And the earlier servicers can engage with a borrower, the better the chances of completing a modification and the greater chance it will perform better over time. "Together with our servicers we have helped nearly 1.2 million struggling homeowners avoid foreclosure since the crisis began in 2009," Gilmore said. "Our serious delinquency rate— the percent of borrowers who are 90 days past due or in foreclosure—is at its lowest level in seven years. And an improving housing market and economic picture bode well for many homeowners who are underwater or struggling." Freddie Mac is currently preparing for the "new normal" in mortgage servicing for 2017 and beyond, Gilmore said. e current outlook is for fewer underwater borrowers, rising mortgage interest rates, and "more localized patterns of booms and stress in the housing market and the economy as a whole." e new normal includes making sure that loss mitigation programs continue to be effective for borrowers, which includes planning for a world without the government's HAMP and Home Affordable Refinance Program (HARP), both of which are set to expire at the end of the year. ese are important considerations we're thinking through with our regulator, the Federal Housing Finance Agency, and the industry," Gilmore wrote. "However, I think it's important to note that the majority of modifications we complete today are through our proprietary programs." Also to be considered in the era of the new normal, Gilmore said, is how to determine borrower eligibility—for example, when to require documentation and when a streamlined process is necessary. GSEs NEARING LOAN MODIFICATION MILESTONE e results of Federal Housing Finance Agency (FHFA)'s Foreclosure Prevention report for April 2016 show that the enterprises completed more than 16,000 foreclosure prevention actions in April 2016, bringing the total of prevention actions to more than 3.7 million since the start of the conservatorships in September 2008. Additionally, over half of these actions have been specifically permanent loan modifications. ere were 10,784 permanent loan modifications in the month of April, bringing that total to approximately 1.94 million since the start in September 2008. If the FHFA continues to complete permanent loan modifications at their current pace, they will pass 2 million in September. e report also showed the share of modifications with principal forbearance fell to 18 percent as well as modifications with extend-term only also decreasing to 48 percent of all permanent modifications in April. According to the report, this has been attributed to improved house prices and a declining Home Affordable Modification Program eligible population. Also in April, FHFA reported that there were 2,280 short sales and deeds-in-lieu completed, taking that number down 17 percent compared with March's short sales and deeds-in-lieu reported number. In regards to the enterprises' mortgage performance, it was found that the serious delinquency rate for mortgages guaranteed by either Fannie Mae or Freddie Mac decreased by four basis points to 1.31 percent at the end of April from 1.35 percent at the end of March. According to FHFA, the enterprises' third-party and foreclosure sales declined 7 percent from 8,176 in March to 7,595 in April. Foreclosure starts also decreased 18 percent from 21,506 in March to 17,665 in April rounding out the report for this period. e April 2016 Foreclosure Prevention Report from the FHFA highlights the actions taken since their commencement in September 2008 after the housing market crisis all the way to their current progress as of the end of April 2016. The number of states who have a higher negative equity share than the national average. Source: CoreLogic STAT INSIGHT 15

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