Tag Archives: Redefault

As robo-signing reviews reach completion, servicers are beginning to work through some of their foreclosure backlogs, according to a third-quarter report from Moody's Investors Service. At the same time, the ratings agency found that loan modifications are on the decline. Servicers are now turning to loss mitigation alternatives such as short sales and deeds in lieu, Moody's says. The agency is also forecasting longer timelines this year to move properties from foreclosure sale to REO liquidation.

Citigroup's fourth-quarter results fell far short of analysts' expectations, despite a 40 percent drop in credit losses from the previous year. The company reported net income of $1.2 billion, or 38 cents per share, for the fourth quarter of 2011. Analysts were looking for 50 cents per share. Company officials told investors that legacy mortgage issues are the single largest source of risk facing the U.S. banking industry. Citi saw loan buybacks go up 80 percent in 2011 as it stockpiled reserves for mortgage litigation costs.

Treasury released a new report Monday highlighting results from the Home Affordable Modification Program (HAMP). Nearly 910,000 homeowners have received a permanent HAMP modification, saving $9.9 billion in monthly mortgage payments. Officials say they will continue to press servicers to assist underwater borrowers and address second-lien issues. A total of 38,243 principal-reducing permanent HAMP mods have been granted, and 54,828 second-lien mods have been started under the federal program.

Homeowners who receive foreclosure prevention counseling are at least 67 percent more likely to be current on their loans nine months after a loan modification than those who do not, according to NeighborWorks America. Additionally, among homeowners who receive mortgage modifications, those who participate in counseling decrease their monthly payments by $176 more than those who do not. However, NeighborWorks says the reduced redefault rate is more a result of the counseling than the lower monthly payment.

Holistic financial counseling -- that which focuses on a borrower's entire financial situation -- can prevent both foreclosures and re-defaults, according to a recent study sponsored by special servicer Outreach Financial Services. Holistic financial counseling can save servicers up to $71.5 million in losses on a portfolio of 10,000 loans, according to the study. When holistic counselors review a borrower's entire financial status, they are generally able to diminish monthly spending by $200 to $300.

That ominous shadow inventory of repossessed and soon-to-be repossessed homes is getting smaller. Standard and Poor's (S&P) has released its third-quarter shadow inventory update. The agency says the volume of distressed assets included in its assessment dropped from $405 billion in the second quarter to $384 billion in the third. This figure has been on a steady decline since mid-2010. At current liquidation rates, S&P says it will take 45 months to work through the industry's shadow inventory.

Treasury has released a new progress report on its Making Home Affordable initiative, covering all the ""H"" acronyms. Since the program started in April 2009, 857,000 homeowners have received permanent loan restructurings under HAMP, and 894,000 have refinanced their mortgages through HARP. HAFA transactions tally just under 19,000. Officials say they continue to see a fall in mortgage defaults due in part to foreclosure prevention programs reaching more borrowers upstream in the process, but there's ""much more work to do.""

Treasury released a new progress report on its Home Affordable Modification Program (HAMP) Wednesday. The number of modifications granted continues to slip - fewer than 26,000 in August - but each month's results are chipping away at the pool of eligible borrowers who fit the HAMP criteria. Treasury's report comes just one day before a House subcommittee is scheduled to hold a hearing on the administration's response to the housing crisis, and one of HAMP's most outspoken critics is heading to Capitol Hill to testify.

Data released Thursday by a federal banking regulator provides a snapshot of mortgage performance over the second quarter of this year. Both early stage and serious delinquencies increased slightly compared to the previous three-month period, as did completed foreclosures, while new modification actions fell nearly 20 percent. Perhaps the most troubling result in the report is post-modification performance. Of loans modified since the beginning of 2008, nearly half have since gone delinquent.

Mortgage servicers completed 56,000 permanent loan modifications through their own proprietary assistance programs during the month of July, according to figures released Wednesday by HOPE NOW. July's tally represents an 11 percent increase over the 50,000 proprietary mods reported in June. At the same time, foreclosure sales fell by 11 percent month-to-month and newly initiated foreclosure actions slipped 5 percent. HOPE NOW also found that the redefault rate for proprietary modifications is 20 percent.