Fannie Mae’s overall single-family serious delinquency rate dropped another notch in November, according to its most recent report, but the current government shutdown raises questions about whether that trend will continue.
The rate at which all single-family loans went unpaid for 90 days or more fell to 0.76% from 1.12% a year ago. Fannie’s serious delinquency rate for single-family loans was 0.79% in October.
However, the rate of serious delinquencies in loans originated between 2009 and 2018 remained the same at 0.33%. Mortgages originated during this span of time represent 92% of Fannie’s outstanding book of business.
The serious delinquency rate for loans originated during the housing boom-and-bust cycle between 2005 and 2008 dropped to 4.5% from 6.26% a year ago. The serious delinquency rate for this vintage in October was 4.82%. These loans make up 5% of Fannie’s current book of business.
Loans originated in 2004 or earlier had a 2.62% serious delinquency rate in November, down from 3.05% a year ago and 2.73% in October. These loans make up the remaining 3% of Fannie’s book of business.
Single-family loan performance at Fannie could potentially deteriorate going forward, depending on the length of the government shutdown and the effect it has on the broader mortgage market.
While Fannie continues to operate during government shutdowns because of its status as a quasi-governmental agency, the situation can affect a borrower’s ability to make scheduled payments. Affected borrowers can be offered forbearance under Fannie’s policies, the government-sponsored enterprise noted in a letter to lenders.
The shutdown may affect borrowers’ ability to pay or close a loan if, for example, they are employed by the federal government, and their employment is impacted, Fannie noted.
During a shutdown, lenders may have trouble obtaining certain employment or income verifications needed for loan closing, which Fannie offers workarounds for.