Serious delinquencies for single family homes, which are loans that are either in foreclosure or three month’s late on payments, declined for both Freddie Mac and Fannie Mae in August.
For Fannie, the delinquency rate dropped to 4.03 percent, down from 4.08 percent in July and 4.75 percent in August 2010. Fannie’s rate peaked in February 2010 at 5.59 percent.
For Freddie, the rate was down to 3.49 percent in August, a decline from 3.51 percent in July and 3.83 percent in August 2010. Freddie’s rate peaked also peaked in February 2010 at 4.20 percent.
From 1998 to 2008, neither rates ever exceeded 1 percent.
Bill McBride, who writes the popular financial blog Calculated Risk, offered some perspective on the dramatic rise and steady fall of the delinquency rates: “Some of the rapid increase in 2009 was probably because of foreclosure moratoriums, and also because loans in trial mods were considered delinquent until the modifications were made permanent.”
McBride continued, “The serious delinquency rate has been falling as Fannie and Freddie work through the backlog of delinquent loans. The normal serious delinquency rate is under 1%, and at this pace of decline, the delinquency rate will be back to “normal” in four or five years!”
McBride’s post also featured this extremely helpful graph, which charts the two lender’s delinquency rates for the last 13 years.