Robo-signing slows Fannie, Freddie foreclosure sales

Loan servicers working for Fannie Mae and Freddie Mac drastically slowed the pace of foreclosure sales during the fourth quarter, largely due to moratoriums on foreclosures initiated during the “robo-signing” controversy, federal regulators said in a report released today.

Third-party and foreclosure sales of Fannie and Freddie homes fell 44 percent from the third quarter to the fourth, to 76,645 homes, the Federal Housing Finance Agency said in the report.

Fannie and Freddie loan servicers also eased up on foreclosure starts, which fell 8 percent from quarter to quarter, to 309,976.

Impact of robo-signing controversy on Fannie and Freddie foreclosure starts and sales

Source: Federal Housing Finance Agency.

Short sales were also down nearly 13 percent from the third quarter, to 25,734. Fourth-quarter short sales were still up nearly 35 percent from a year ago.

For 2010 overall, Fannie and Freddie’s loan servicers started foreclosure proceedings on 1.17 million homes, up 12 percent from 2009, and completed 424,986 third-party and foreclosure sales, a 73 percent increase from the year before.

Fannie and Freddie’s loan servicers signed off on 107,953 short sales in 2010, nearly double the 55,447 approved in 2009. Deeds in lieu of foreclosure more than doubled from 2009, to 6,043.

Loan modifications more than tripled, from 163,647 in 2009 to 575,022 last year.

Reporting 2010 results, Fannie Mae said its real estate owned (REO) inventory of single-family homes totaled 162,489 at the end of 2010, nearly double the 86,155 homes in its possession a year ago. Fannie Mae valued those homes at $15 billion.

In its annual report to investors, Freddie Mac said its REO inventory climbed 60 percent from a year ago, to 72,079 homes valued at nearly $7 billion.

Fannie Mae said about 27 percent of its REO properties couldn’t be marketed because they were still within their redemption periods. About 40 percent of homes the company is unable to market for sale were occupied, meaning they are likely to remain REO for a longer period of time.

“Given the large current and anticipated supply of single-family homes in the market, it will take years before Fannie Mae’s inventory of real estate owned (REO) properties approaches pre-2008 levels,” according to a press release.

Loan servicers, federal regulators and state attorneys general are reportedly negotiating a settlement that could help servicers put behind them allegations that they took shortcuts in preparing documents used in foreclosure proceedings.

Although a settlement is not imminent, statistics show foreclosure filings have already picked up again this year in nonjudicial foreclosure states that have been least affected by the crisis.

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