Loss Mitigation

More than 12,700 Bank of America customers now have a permanent loan modification under the Home Affordable Modification Program (HAMP), according to the bank's monthly report to the Department of the Treasury. Up from 3,200 completed modifications reported in December, Bank of America quadrupled its number of permanent HAMP modifications in just 30 days.

Sixteen months after Countrywide Financial settled one of the biggest predatory lending lawsuits in the nation's history, restitution is coming for distressed homeowners in Florida. More than 2,700 Countrywide borrowers in the Sunshine State are being sent foreclosure relief payments from the lender this week, totaling $16.9 million. Florida's Attorney General said the checks will make a ""significant difference"" for struggling families who are trying to save their homes.

The percentage of borrowers at least 60 days past due on their mortgage increased for the 12th straight quarter, hitting 6.89 percent by the end of 2009, according to new data released by TransUnion Tuesday. This precursor to foreclosure increased 10.24 percent from the previous quarter, and compared to the year-ago delinquency rate of 4.58 percent, past due mortgages are up a staggering 50 percent, TransUnion said.

To meet the ever-increasing need for successful analysis and evaluation of loss mitigation efforts, loan servicers and lenders are embracing online technology. As a result, Denver-based Mortgage Cadence, Inc., a provider of enterprise lending solutions for the financial services industry, has entered into the mortgage servicing technology arena with the introduction of the Loss Mitigation Gateway to provide online initiation, management, and execution of the loss mitigation process.

The PMI Group Inc. said Tuesday that it lost $228.2 million, or $2.76 per share, in the fourth quarter of last year, even though it posted gains in revenue. The default rate on mortgages the company insures hit 21.40 percent at the end of last year. The company also announced that it has received approval from the state of Arizona and from Fannie Mae for its subsidiaries to continue writing mortgage insurance even if PMI falls below mandated capital requirements.

Thirty-two banks have folded in Georgia since August 2008, making it the most failure-prone state of the latest recession. The blame for most of Georgia's institutional collapses can be placed squarely on the region's deteriorating real estate market. But lawmakers there are changing the rules to allow banks to exceed current lending caps if a borrower hasn't defaulted on their payments, making it easier for them to renew large commercial real estate loans.

Moody's Investors Service is forecasting another 8 percent decline in home prices before a bottom in property values is reached. That's actually an improvement over previous estimates, but it's the duration of depreciation that's the headline grabber. Last month, Moody's analysts were predicting the price floor to be reached in the third quarter of this year. Now they say it won't be hit until the end of the fourth quarter, largely because of the ""underwhelming"" success of the administration's Home Affordable Modification Program (HAMP).

Loans within commercial mortgage-backed securities (CMBS) are transferring to special servicing in larger batches and with increasing speed, Fitch Ratings said in its weekly U.S. CMBS newsletter. Last month saw 248 loans totaling $4.27 billion move into special servicing. That figure is four times the balance that transferred in January of last year.

Las Vegas has the highest foreclosure rate of any metro in the country, but lenders there have become more willing to accept short sales as an alternative to foreclosure. The Greater Las Vegas Association of Realtors (GLVAR) reports that 21.1 percent of all existing-home sales in the area last month were short sales. GLVAR called it ""one of the more promising trends"" for the month.

Theoretical analysis conducted by the Leavey School of Business at Santa Clara University found that banks would suffer fewer defaults among modified mortgages if they would shorten the duration of the restructured loans, rather than lengthening as they tend to do, and if they would forgive part of the loan - a method many are unwilling to apply because of the accounting impact. The study concludes, however, that principal write-downs maximize a borrower's willingness to pay, thereby maximizing the loan's economic value to the lender.