Freddie Mac has been pummeled thoroughly in the eye of the real estate meltdown, so much so that the government finally had to take over its operations due to heavy mortgage losses. In the recent past its matters seemed to be settling down a bit but now it needs another $10 billion from Washington to cover its 1st quarter setbacks. Besides that, it also has some good news to release.
For the first time since April of 2007 Freddie Mac can report that delinquencies for single-family home loans it guarantees slipped to 4.13% in March, from 4.20% in February. Although it isn't a major improvement by any means, it does break a three-year losing streak. It's significant for the GSE, or Government Sponsored Enterprise, itself, and also for the drained housing market. It's too early to tell if this is a permanent shift but at least a temporary backstop has been set. It gives both new energy to begin climbing out of the darkness.
Mortgage lenders have started using a revamped strategy to deal with distressed homeowners by approving more short sales instead of letting property go into foreclosure. Home loan modifications have also had a positive effect on Freddie Mac's ebbing delinquency rate. Deed-in-lieu of foreclosure is another legal process commonly used nowadays when mortgage borrowers are unable to meet their payment obligations.
Short sale has largely turned into a method du jour, especially in worst-hit areas like Las Vegas, Nevada. As mortgage providers get more realistic and organized at handling them it's foreseeable that Freddie Mac's delinquency rate will continue to gradually head down. Then again, while this statistic might look better in the coming months the fact is that there still are scores of homeowners who are struggling to keep up. Or don't intend to keep up due to being badly underwater. Short sale or the other less-severe methods damage their credit somewhat less than a straight foreclosure, but it's a long-lasting scar nevertheless.