U.S. Mortgage Modifications Rise Ahead of FHFA Policy Shift

The Federal Housing Finance Agency oversees Fannie Mae and Freddie Mac, whose loss-mitigation programs use forbearance, payment deferrals and permanent loan modifications to help distressed homeowners avoid foreclosure. The August figures matter because the regulator’s enhanced Flex Modification policy was due to take effect on Dec. 1, 2024. Announced on May 29, the update was designed to broaden access to meaningful payment reductions as elevated mortgage rates and home prices strained affordability.

FHFA said on Nov. 12, 2024, that the enterprises completed 14,614 foreclosure-prevention actions in August, a slight decline from July, while permanent loan modifications rose 4.7% to 5,818. Newly initiated forbearance plans increased to 10,713 from 10,396, and outstanding loans in forbearance climbed to 38,060 from 34,901. Refinance volume also rose as the average 30-year fixed mortgage rate fell to 6.50% from 6.85%; cash-out loans accounted for 70% of refinancings.