Real Estate

Loan Modifications Continue

Loan Modifications Surpass One Million Mark for 2010

09/01/2010 By: Carrie Bay

The industry has completed 1.13 million permanent loan modifications for at-risk homeowners so far in 2010, according to data released Wednesday by HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers, and non-profit housing counselors.

For the month of July alone, servicers completed more than 120,000 proprietary loan modifications for homeowners. It was the second straight month that proprietary mods topped the 120K mark. As reported by Treasury Department, mortgage servicers also completed 36,695 permanent mods through the government’s Home Affordable Modification Program (HAMP) in July.

If a borrower does not qualify for HAMP, mortgage servicers determine eligibility for a proprietary loan modification that may help the homeowner stay in their home. HOPE NOW reports that 86 percent of proprietary modifications completed in July reduced the monthly payment for homeowners in order to make them more sustainable.

The industry group also reports that since January of this year, mortgage delinquencies of 60 days or more past due have dropped 20 percent, as of July 2010. HOPE NOW’s data show that 60-plus-days delinquencies decreased from 3,487,783 in June to 3,298,236 in July, a drop of 5 percent over the one-month period.

A number of analysts have suggested that recent drops in delinquency stats are simply the byproduct of an increase in foreclosures by servicers as they work through the huge backlog of defaulted mortgages and push cases through the pipeline.

HOPE NOW’s data seems to support this assumption. Along with the slight month-to-month drop in delinquencies, the organization also reported that foreclosure starts jumped 22 percent in July and completed foreclosure sales rose 12 percent. July’s foreclosure starts outpaced loan mods during the month by nearly 90 percent.

Foreclosures were initiated on 226,664 homes during the month of July, up from 186,395 in June, according to HOPE NOW. Sales were finalized on 97,951 foreclosed homes in July, compared to 87,842 the month prior.

Faith Schwartz, senior advisor for HOPE NOW, said, “As noted, we did see an increase in foreclosure starts and sales, despite the unprecedented efforts of the industry, along with its government and non-profit partners to offer many alternatives to foreclosure. We believe this is a function of borrowers moving through the pipeline of all eligible program offerings (government and private industry) to exhaust all alternatives.”

Schwartz added, “The increase in foreclosures is also a reflection of the continued challenges facing the economy, particularly the level of unemployment nationwide. We remain hopeful that as jobs start to come back the housing market will stabilize.”

Since HOPE NOW initiated survey data reporting in July 2007, the organization says more than 3.5 million homeowners have saved their homes through permanent loan modifications. This total reflects the combination of proprietary loan modifications plus those completed under HAMP.

Combined with other mortgage options, such as repayment plans and forbearance, the mortgage industry has assisted almost 10.4 million homeowners since HOPE NOW was formed in 2007.

Courtesy of DS News

By Diego Loya

Diego Loya is a Realtor - Broker at Home Living Real Estate Brokerage, a Orange County full services real estate company. Over the past 12 years, Diego has helped homeowners sell and buy their homes. He's loves educating and empowering real estate consumers. You can find him on Google, Facebook and Twitter.

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