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Foreclosure activity sank in the third quarter of 2019, dropping to the lowest level in nearly 15 years, according to the latest report from ATTOM Data Solutions, HousingWire.com reported. Foreclosure activity in the third quarter fell 19 percent from a year ago to the lowest level since the second quarter of 2005, a 13-year low, ATTOM’s Q3 2019 U.S. Foreclosure Market Report showed. There were a total of 143,105 U.S. properties with foreclosure filings in the third quarter, which includes default notices, scheduled auctions or bank repossessions. This represents a decrease of 6 percent from the previous quarter and a decrease of 19 percent from a year ago, the report showed. Total foreclosure activity in the third quarter was 49 percent below the pre-recession average of 278,912 properties with foreclosure filings per quarter between the first quarter of 2006 and the third quarter of 2007 – the 12th consecutive quarter where U.S. foreclosure activity has registered below the pre-recession average.

Interest rates have been plummeting, but the cost of taking out a mortgage hasn’t fallen as fast, the Wall Street Journal reported. Since the end of June, the Treasury yield has fallen about 0.4 percentage point, but the average mortgage rate has dropped less than a tenth of a percentage point. The gap between the two rates is near its highest in more than seven years, according to an analysis by Dow Jones Market Data. The average 30-year fixed rate for a mortgage was 3.65 percent last week, according to mortgage company Freddie Mac. That is among the lowest average rates this year, but it has bounced up and down in recent months. Mortgage executives, traders and investors tend to watch the spread between the 10-year Treasury yield and the 30-year mortgage rate as a barometer of the mortgage market’s health. The spread blew out as the market imploded in 2008, when Treasury yields plummeted but lenders were slower to adjust mortgage rates. More recently, the difference has signaled that borrowers’ relatively strong appetite for mortgages is outpacing the industry’s ability to make them. Many lenders scaled back last year as mortgage demand dropped, so the current demand is stretching their capacity.

The federal government has dramatically expanded its exposure to risky mortgages, as federal officials over the past four years took steps that cleared the way for companies to issue loans that many borrowers might not be able to repay, the Washington Post reported. Now, Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee almost $7 trillion in mortgage-related debt, 33 percent more than before the housing crisis, according to company and government data. Because these entities are run or backstopped by the U.S. government, a large increase in loan defaults could cost taxpayers hundreds of billions of dollars. This risk is the direct result of pressure from the lending industry, consumer groups and political appointees, who lobbied for the government to intervene when homeownership rates fell several years ago. Starting in the Obama administration, numerous government officials obliged, mistakenly expecting that the private market ultimately would take over. In 2019, there is more government-backed housing debt than at any other point in U.S. history, according to data from the Urban Institute. Taxpayers are shouldering much of the risk, while a growing number of homeowners face debt payments that amount to nearly half of their monthly income, a threshold many experts consider too steep. Roughly 30 percent of the loans Fannie Mae guaranteed last year exceeded this level, up from 14 percent in 2016, according to Urban Institute data. At the FHA, 57 percent of the loans it insured breached the high-risk echelon, jumping from 38 percent two years earlier.

The Trump administration yesterday took a critical step toward releasing Fannie Mae and Freddie Mac from government control, agreeing to allow the mortgage giants to hold on to more of their profits, the Washington Post reported. The allowance is a move toward independence for the mortgage companies more than a decade after taxpayers bailed them out. It comes a month after the Trump administration unveiled a sweeping plan to remake the housing market that includes allowing Fannie Mae and Freddie Mac to operate as private companies again. With this step, Fannie Mae and Freddie Mac will be allowed to hold onto more capital, $25 billion and $20 billion respectively. That is still far less capital than the $100 billion the Trump administration estimates both companies and Congress still must sign off on to fulfill other measures envisioned by the Trump administration to remake the companies.