Loss Mitigation

The percentage of home loans making their way through the foreclosure process jumped to a new record high during the first quarter of 2010, the Mortgage Bankers Association (MBA) reported Wednesday. Despite the industry's, and the government's, all-out attack on the nation's foreclosure problem, MBA's regular quarterly study showed that 4.63 percent of outstanding mortgages were in foreclosure at the end of March. Another 10.06 percent were past due.

HUD Secretary Shaun Donovan is asking Congress to release additional funds to help communities combat the ongoing effects of the housing crisis and home foreclosures. He says the Obama administration is committed to working with lawmakers to secure a third round of funding for HUD's Neighborhood Stabilization Program (NSP). The federal agency has disbursed $6 billion through NSP to help local governments and non-profit developers buy and rehabilitate or demolish vacant and foreclosed homes in their communities.

Consumer default data released Tuesday by Standard & Poor's and Experian show a sharp drop in the number of overdue first and second mortgages. Based on Experian's consumer credit database of approximately $11 trillion in outstanding loans sourced from 11,500 lenders, the companies' April default index for first mortgages was down 31 percent from a year ago, while defaults on second mortgages fell 45 percent over the past 12 months.

As of April 30, Wells Fargo had completed 36,094 permanent modifications under the administration's Home Affordable Modification Program (HAMP). According to Treasury, Wells Fargo ranks third for the number of permanent modifications completed to date, trailing behind Bank of America, with 56,398 permanent modifications, and JP Morgan Chase, with 39,507.

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.

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.

Interthinx recently announced the release of ValueGUARD, an automated collateral risk solution that the company says will revolutionize the way property, neighborhood, and market area risk can be assessed by lenders and investors. The solution identifies the risk of future value deterioration as well as risk associated with the current value of a property, Interthinx explained.

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.