The Fannie Mae and Freddie Mac modifications hit a 15-month excessive within the second quarter

Single-family loan adjustments at government-sponsored Fannie Mae and Freddie Mac rose nearly 45% between the first and second quarters of this year, rebounding to levels not seen since Q1 2020.

According to a report by the Federal Housing Finance Agency released Friday, a total of more than 16,000 loan terms adjustments were made for affordability reasons, up from over 11,000 in the previous fiscal year and 14,000 in the previous year.

The return to the highs last seen just at the start of the pandemic shows that GSE's loan modifications have normalized as more people left the deferral plans. It also suggests that at least a small wave of mods will follow, exceeding pre-pandemic levels, as many single-family plans expire.

However, these second quarter numbers also add to signs that the pandemic-induced wave of change may not be historically large. At their peak after the Great Recession, single-family mods on the two GSEs peaked in 2010 at more than 170,000, and the forbearance rate on loans sold to Freddie and Fannie is lower than other types of single-family loans .

According to the FHFA's latest foreclosure prevention report, there were more than 57,000 single-family loans with deferred payments in the second quarter, up from 71,000 in the previous fiscal year and 232,000 a year ago.

Delayed payments, where borrowers who leave their deferral resume their normal monthly obligations and add missing payments at the end of their loans, saw slower growth in the second quarter. Single-family deferrals were 139,591 compared to 130,014 in the first quarter and 232,000 a year ago.

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