Volume 210 | December 19, 2024

Guardian Asset Management

Weekly Newsletter

Guardian endeavors to provide you with the latest in housing, industry and market news from Washington D.C. and around the country. It is our goal as your industry partner to be informative, relative and topical.

FHFA says it prevented 43K foreclosures in Q3, but new cases rose 27%

The number of homeowners helped since the GSEs

entered conservatorship in 2008 now tops 7 million

The Federal Housing Finance Agency (FHFA) on Thursday announced that it initiated 43,459 foreclosure prevention actions in the third quarter of 2024, bringing the total number of homeowners helped to more than 7 million since the government-sponsored enterprises (GSEs) entered conservatorship in 2008. But the number of foreclosure starts spiked by 27% to 22,025 during the quarter.

This is according to the agency’s Q3 2024 foreclosure prevention and refinance report. The FHFA also found that 35% of all loan modifications completed in the third quarter resulted in an average reduction of “more than 20%” to borrowers’ monthly payments, and refinances rose by 9,214 from Q2 to total 98,785 in Q3.

The GSEs’ serious delinquency rate saw a slight uptick in Q3 to 0.53%, but this rate is still lower than those for loans sponsored by the Federal Housing Administration (3.63%) and Department of Veterans Affairs (2.26%), as well as the industrywide average of 1.55%.

Forbearances also increased in Q3 to 39,669 loans as of Sept. 30, or roughly 0.13% of the GSEs’ single-family conventional book of business. This is an increase from 31,827 (or 0.1%) at the end of June, with the agency noting that about 1% of these loans have been on forbearance plans for more than 12 months.

Commercial Mortgage Delinquency Rates

Increase in Third Quarter

Commercial mortgage delinquencies increased in the third quarter of 2024, according to the Mortgage Bankers Association’s (MBA) latest Commercial Delinquency Report.

“The share of the balance of delinquent commercial mortgages increased for every major capital source during the third quarter of 2024,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The increases varied by capital source and were driven by the particularities of each individual loan and property. Stresses differ by property type and subtype, geographic market and submarket, loan type and vintage, borrower type and more.”

MBA’s quarterly analysis looks at commercial delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. Together, these groups hold more than 80% of commercial mortgage debt outstanding. MBA’s analysis incorporates the measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another. As an example, Fannie Mae reports loans receiving payment forbearance as delinquent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement.

More Sellers Are Listing Their Homes, Hoping to Cash in on High Prices and Demand From Buyers

New listings of homes for sale are up 7.6%, the biggest year-over-year increase since June (except the four weeks ending November 24, when the increase was inflated due to Thanksgiving). This is based on data from the four weeks ending December 15.

There are several reasons more sellers are putting their homes on the market. One, home prices are high; the median U.S. home sale price is up 6% year over year, the second-biggest increase since October 2022. Two, consumer confidence rose to a 16-month high after November’s election, motivating more sellers to make the major financial decision to list their home. And finally, some sellers are hoping to take advantage of the increased homebuying demand we’ve seen over the last month. 

Home Expenses Biting Off Larger Chunks Of Buyers' Incomes

"Something's got to give," implores ATTOM CEO Rob Barber. "Or a growing number of buyers will have no choice but to toss in the towel."

Today, the Mortgage Bankers Association (MBA) reports that homebuyer affordability fell in November with the national median payment applied for by purchase applicants increasing 0.3% to $2,133 from $2,127 in October.

The increase in the MBA’s Purchase Applications Payment Index (PAPI) indicates a worsening of an ongoing decline in borrower affordability conditions.

Edward Seiler, MBA’s associate vice president of housing economics, and executive director at the Research Institute for Housing America, said that elevated mortgage rates and rising home prices are the culprits behind buyers’ decline in purchasing power, but voiced optimism for originations next year.

“With demographic support for housing demand, and the gradual increase in housing supply that is expected, home sales and purchase originations are expected to grow in 2025 even as affordability challenges persist,” Seiler said.

Florida Stung by Insurance 'Exodus' as Insurers Dump Residents

The Senate Budget Committee has raised concerns over the increasing number of home insurance nonrenewals across the U.S., highlighting Florida specifically, where the recent "exodus" of providers has exacerbated the problem.

Despite recent efforts from the Florida state legislature to stabilize the insurance market, the Sunshine State is still in the midst of a crisis that has left homeowners struggling to find affordable home coverage, if they can find any at all. The state, which is vulnerable to devastating hurricanes and tropical storms, has seen a number of insurers cut coverage in its most vulnerable regions or exit the market entirely in recent years, as the risks are increasingly outgrowing the profits they can make.

Affordable Housing Investments to Grow in 2025,

But Economic Concerns Loom

While investor sentiment around financing for affordable housing has seemingly improved over 2023, a new survey from Walker & Dunlop suggests that market participants remain divided on how the sector will fare next year.

More than half of survey respondents reported an increase in debt and equity investments in affordable housing compared to last year, signaling a more favorable investment climate for 2025. However, some remain cautiously optimistic, anticipating that systemic challenges such as high interest rates and inflation may dampen the sector’s outlook.