Loss Mitigation

Foreclosure activity in California is beginning to trend downward. The locally-based tracking firm ForeclosureRadar says its statistics dropped last month for every stage of the foreclosure process, with new defaults down more than 17 percent. It's the second straight month that the company has recorded across-the-board declines. But ForeclosureRadar remains cautious in its analysis, noting that many distressed homeowners have simply vacated the property and thrown in the towel on modifying their loan or completing a short sale.

The Texas State Affordable Housing Corporation (TSAHC) recently received a program-related investment in the amount of $500,000 from the Meadows Foundation, a private philanthropic institution based in Dallas, Texas. According to TSAHC, this award will support construction financing for the rehabilitation and development of foreclosed and vacant properties purchased through its Affordable Communities of Texas land banking program.

MOS Group, Inc. has expanded its service offerings to include short sales and deeds-in-lieu that comply with the Treasury Department's Home Affordable Foreclosure Alternatives (HAFA) program requirements. In order to assist borrowers throughout all phases of this process, MOS Group said it is leveraging its borrower-focused methodology, comprehensive employee training and education program, and highly transparent technology platform.

Bank of America's loss mitigation activity under the administration's Home Affordable Modification Program (HAMP) has risen once again. In an announcement Tuesday, the bank said it converted an additional 16,000 homeowners from trial to permanent contracts in the past month, bringing its total completed HAMP modifications to more than 70,000. However, Bank of America said it does not expect these modifications to be fully reflected in the Treasury Department's monthly progress report.

Subprime mortgage performance appears to have turned a corner, thanks to the administration's Home Affordable Modification Program (HAMP), according to Moody's Investors Service. After rising steadily for nearly four years, Moody's says the total delinquency rate among subprime loans held in residential mortgage bonds peaked at 54.4 percent in January 2010. Over the next three months, though, the delinquency rate began to decline as permanent HAMP mods doubled, and as of April, it had dropped to 51.5 percent.

Fannie Mae said Monday that it is extending the time period for servicers to request reimbursement for counseling provided by HOPE NOW Alliance members. The GSE covers the cost of counseling fees paid by its servicers on behalf of borrowers who turn to the HOPE NOW Alliance to resolve mortgage delinquencies.

In an effort to improve the system of maintaining and selling its inventory of Federal Housing Administration (FHA) foreclosed homes, HUD has awarded 55 new contracts - 23 to companies who will serve as asset managers and 32 companies who will serve as field service managers - under the third generation of its management and marketing program, known as M&M III. Currently, HUD's foreclosure inventory amounts to approximately 44,000 homes. The agency says the M&M III program is expected to create 1,200 new jobs nationwide.

The volume of troubled residential properties has been growing since 2005, but Standard & Poor's says regional inventory levels and trends will determine the detriment of this shadow supply. In the New York City metro area, for example, the company estimates that it will take 103 months for shadow inventory to clear, assuming current liquidation rates. That's nearly 3.5 times the national average of 34 months. By contrast, the Phoenix area has the lowest level of shadow inventory, at 16 months.

With short sales on the rise, mortgage fraud scams involving these transactions may be following the same trend. In fact, two former Connecticut real estate agents, Sergio Natera and Anna McElaney, recently pled guilty to bank fraud stemming from their involvement in a short sale mortgage fraud scheme. According to court documents, Natera and McElaney worked together to defraud various banks, including Regions Bank, Wells Fargo, and other financial institutions by means of ""materially false and fraudulent pretenses, representations, and promises.""

Chase loan advisors are setting up shop in downtown Atlanta for five days to help struggling borrowers work out a plan to save their homes. The company says 90 Chase loan counselors will be on hand to assist borrowers with loans modifications or short sales.