Loss Mitigation

Data released this week by federal regulators show that 14 percent of all mortgages were non-performing at the end of 2009 and more than half of the loans modified in the first quarter of 2009 were delinquent again by the end of the year. With the continued deterioration in loan performance, the regulators says lenders' have stepped up home retention actions, but the report notes that servicers expect a larger number of mortgages to slip into foreclosure in the coming months as prevention options are exhausted.

Utah's first full-service real estate foreclosure center was opened this month in Taylorsville by RCI Realty, a real estate firm based in Cottonwood Heights. The new center has a team of experts trained in all fields to educate homeowners and investors about buying and selling foreclosed properties, and interested individuals have free access to attorneys who can guide them through the legal maze that often accompanies these processes.

The Federal Housing Finance Agency released a report Wednesday, summarizing Home Affordable Modification Program (HAMP) modification and Home Affordable Refinance Program (HARP) data for Fannie Mae and Freddie Mac. As of January 31, the GSEs had converted 73,376 HAMP mods to permanent status and made HARP a larger component of their refinancing strategies.

The administration unveiled major expansions to its foreclosure prevention plan Friday. The new policies include principal write-downs for underwater mortgages, an FHA negative equity refinancing program, temporary assistance for unemployed homeowners, and larger incentives for short sales and deeds-in-lieu. Treasury officials say the new program enhancements will better align efforts to meet President Obama's goal of helping 3 to 4 million borrowers save their homes.

The Obama administration plans to announce a major new housing initiative Friday involving principal write-downs for underwater borrowers and temporary assistance for unemployed homeowners, according to sources. It's expected that principal reduction will become a central consideration in Home Affordable Modification Program (HAMP) evaluations, with additional incentives going to servicers who trim mortgage debt for those who owe more than their home is worth. The plan will also require lenders to temporarily reduce monthly mortgage payments for those borrowers who have lost their jobs.

Bank of America's earned principal forgiveness program has already come under inspection. Barclays Capital has released a first-pass analysis, examining the new modification plan's implications for non-agency mortgage-backed securities.

Mortgage Contracting Services (MCS) has launched Broker360, a Web-based portal that allows REO brokers to access the status of preservation work completed by MCS. The company says its approach greatly enhances communication between servicers, field service providers, and real estate agents, and in turn will help reduce the amount of time it takes to market and sell REO properties.

The administration's foreclosure prevention plan has come under heavy fire lately, with critics taking aim at everything from the program's slow conversion rates to servicers' lack of response to borrower and counselor requests. To counter all the flying bullets, a Treasury official told lawmakers Thursday that the administration is instituting new consumer protections into the program, including requiring servicers to evaluate all borrowers who've missed at least two payments and prohibiting foreclosure proceedings until it's determined borrowers are HAMP-ineligible.

Citi announced Thursday that it has committed to participate in the administration's second lien modification program (2MP). The New-York based global financial services company is the fourth major servicer to sign on to the program, which was introduced nearly a year ago. Bank of America, Wells Fargo, and Chase have also agreed to participate in the program. Together, these four servicers own $400 billion of the nation's $1 trillion second lien mortgage market.

Seven housing industry veterans will lead HOPE LoanPort, the counselor Web-based tool that streamlines the submission of completed loan modification applications. In an announcement Wednesday, the organization named its CEO and the six individuals that will serve on its board of directors.