Foreclosure

Subprime mortgage servicer Ocwen Financial Corporation has converted the highest percentage of trial loan modifications for distressed homeowners to permanent status under the administration's Home Affordable Modification Program (HAMP). According to the Treasury's just-released HAMP report on servicer performance, 83 percent of the Florida-based company's customers who had trial modifications through the federal program have now been moved into permanent modifications.

The future of U.S. home prices is acutely tied to the speed and the manner in which distressed sales work through the system, Moody's Economy.com stressed in a report issued this week. The discount on properties sold through foreclosure is now close to 40 percent of a non-distressed existing home price. Price cuts in short sales were averaging around 12 percent at the end of last year, but Moody's says short sale volume is not sufficient enough to temper the impact of foreclosure sales and curb further price declines.

While it's undeniable that the financial crisis and recession were triggered by the bursting of the housing bubble and the subprime mortgage crisis that began in late 2006 to early 2007, a working paper recently released by the research department of the Federal Reserve Bank of Philadelphia suggests that reform to personal bankruptcy law also played an important role. Overall, the researchers calculated that bankruptcy reform caused the number of mortgage defaults to increase by around 200,000 per year even before the start of the financial crisis.

As homeowners continue to default on their mortgage loans, banks are desperate to determine the pre-default triggers that are causing this phenomenon. A new service offered by Atlanta-based VueLogic will give banks the opportunity to do just that and much more. Starting in June 2010, the company is bringing its loan level statistical scoring techniques to the default space to help banks determine the customer behaviors that trigger defaults.

In a servicing policy update issued Monday, Fannie Mae introduced a new Web-based technology tool that automates key functions required of servicers to evaluate borrowers for the Home Affordable Modification Program (HAMP). The GSE's Workout Evaluator automates HAMP's net present value (NPV) test and the modification ""waterfall"" methodology required under the program. It is only for use by Fannie Mae servicers modifying Fannie Mae loans.

Tulsa, Oklahoma-based Williams & Williams Worldwide Real Estate Auction announced the launch of a new proprietary index last week that tracks actual results derived from the company's monthly auction performance data. Williams & Williams says the combination of this tracking system and the company's own pricing models for residential and commercial real estate allow it to provide clients with a 30- to 90-day advanced view of real estate market performance.

The Treasury Department released April data for the administration's Home Affordable Modification Program (HAMP) Monday, showing that permanent modifications have been initiated for 299,092 struggling homeowners. That's an increase of 68,000 or almost 13 percent over March. Government officials stressed that HAMP servicers must be held accountable for their individual performance. New in this month's statistics is information about servicer-specific conversion rates.

Analysts at Barclays Capital say the industry's ominous shadow inventory is close to topping out. New research published by the firm says the supply of homes nearing REO status, defined as 90 or more days delinquent or in the process of foreclosure, will peak this summer and then begin falling gradually as the market becomes stable enough to absorb 130,000 distressed properties a month. Barclays puts the shadow supply at 4.5 million properties, but forecasts at least 4.7 million distressed sales over the next three years.

Mesa Law Group, a California-based law firm with specialty financial services, recently announced that it has partnered with Investors Finance Inc. to provide homeowners an alternative to loan modifications through the firm's Home Owner Mortgage Restructuring (HOMR) program. A strong alternative to loan modification, the HOMR program reduces the principal balance and helps those at risk of losing their home, Mesa Law Group said.

NeighborWorks America and the Ad Council have announced the launch of new national public service announcements (PSA) as part of an ongoing foreclosure prevention campaign. The PSAs are designed to educate homeowners about where they can turn for help if they are at risk of foreclosure.