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GSEs complete 25,000 mortgage modifications in October

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The Federal Housing Finance Agency said the rate of mortgages held by Fannie Mae and Freddie Mac more than 60-days delinquent was 4.5% at Oct. 31, flat with the end of the third quarter.

In a report to Congress, the conservator of the mortgage giants said the delinquency rate inched higher to 12.9% for mortgages with borrowers who had credit scores lower than 660 at close from 12.8% at Sept. 30. The rate of loans delinquent more than 60 days for mortgages with borrowers who had credit scores higher than 660 was 3.3%.

Fannie Mae completed 18,000 loan modifications in October while Freddie Mac closed on 7,000 mortgage modifications. Both levels are down 1,000 from the prior month.

The FHFA said the number of permanent modifications completed through the Treasury Department's Home Affordable Modification Program rose to 387,000 in October from 380,000 the month earlier. Trial modifications declined to 39,000 from 42,000.

After completing more than 575,000 mortgage modifications in 2010, the GSEs have closed about 275,000 this year.

"Reducing enterprise losses by preventing avoidable foreclosures through loan modification and mortgage refinances remains a top priority at FHFA," Peter Brereton, FHFA associate director for congressional affairs, said in his letter to Congress.

"We continue to explore ways to maximize assistance for homeowners and minimize preventable foreclosures" consistent with the Emergency Economic Stabilization Act of 2008, which is when Fannie and Freddie went into federal conservatorship.

The FHFA said refinance volume continued to grow in October as mortgage interest rates dropped to the lowest level in 40 years. More than 962,100 home loans have been refinanced through the federal Home Affordable Refinance Program since it began.

Earlier Wednesday, analysts at Barclays Capital (BCS: 10.8767 -0.21%) said lenders are no longer required to determine a borrower's ability to repay a loan when underwriting mortgages for inclusion in Fannie Mae's HARP 2.0.

Write to Jason Philyaw.

Follow him on Twitter: @jrphilyaw.

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