The number of non-performing loans fell in the first of half of 2018, compared with the same period a year earlier, according to semiannual report from the Federal Housing Finance Agency. In the first half of 2018, 7,140 non-performing loans were sold, compared to 18,419 in 2017. Non-performing loans sold through the first half of 2018 had an average delinquency of 3.1 years and an average current loan-to-value ratio of 95 percent.
Just three states, however, New Jersey, New York, and Florida accounted for 46 percent of non-performing loans that were sold. They accounted for 47 percent of the Enterprises' loans that were one year or more delinquent as of Dec. 31, 2014, which was prior to the start of non-performing loans sales in 2015. From Dec. 31, 2015 to June 30, 2018 the number of loans one or more years delinquent held in the Enterprises' portfolio decreased by 61 percent.
The following provides more on the borrower outcomes in the report:
- As of June 30, 2018, 62 percent of these non-performing loans had been resolved.
- Compared to a benchmark of similarly-delinquent Enterprise non-performing loans that were not sold, foreclosures avoided because non-performing loans were sold were higher than the benchmark.
- Non-performing loans on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes, 28.2 percent foreclosure avoided compared with 12.7 percent for vacant properties.
- Non-performing loans on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties, 65.9 percent foreclosure versus 28.6 percent for borrower occupied properties. Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.
- Twenty percent of the permanent modifications of non-performing loans incorporated arrearage or principal forgiveness. The average forgiveness earned per loan to date was $55,280, with the potential to earn an average forgiveness of $77,491.
