Late payments on single-family home mortgages changed direction and started falling again in Freddie Mac’s latest monthly report.
Freddie Mac’s single-family delinquency rate dropped to 0.69% in February from 0.7% the previous month, returning to a level last seen in December 2018. A year ago, the government-sponsored enterprise’s single-family delinquency rate was 1.06%. Its multifamily delinquency rate has been at 0.01% since last April, but it was slightly higher a year ago at 0.02%.
Freddie Mac recently announced it would be making a series of improvements to its servicing operations while delinquency rates are low, in order to be better prepared for the next cyclical downturn.
For example, the GSE recently launched a Servicer Honors and Rewards Program that will provide monetary awards, technology registrations, trophies or plaques to servicers that make tangible efforts to prevent cure delinquencies and have favorable performance scorecards.
Freddie Mac is planning to make the improvements to its servicing operations over the next three years.
It’s unclear when the next downturn might occur, but some economists are concerned it could be approaching because the current expansion has been going on long enough to be due for a reversal. In addition, economic signals have been mixed to weaker.
For example, home prices tracked by Standard & Poor’s CoreLogic Case-Shiller index registered the smallest year-over-year gain since 2012 in January; and single-family housing starts recorded the steepest decline seen in several months during February. But sales of preowned homes surged in February, recording their largest increase since 2015.
Foreclosure prevention activity during 2018 at both Freddie Mac and Fannie Mae assisted 243,578 borrowers, up from 206,898 in 2017.