Distressed Homeowners Still Turning to Permanent Loan Modifications

Foreclosures are way down and many housing fundamentals are at pre-crisis levels. But for those borrowers still facing foreclosure or at risk of defaulting, permanent loan modification remains a popular option.

According to data released on Monday by HOPE NOW, a private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors, another 26,000 homeowners received permanent loan modifications during the month of January. That number includes modifications completed under both proprietary programs and the government’s Home Affordable Modification Program (HAMP), which is set to expire at the end of this year.

The total number of non-foreclosure solutions—which includes permanent loan modifications, short sales, deeds-in-lieu of foreclosure, and other workout plans—totaled approximately 102,000 for the month of January, according to HOPE NOW. This number was slightly more than three times the number of foreclosure sales completed during the month (33,000). Foreclosure sales, which typically see a seasonal decline in December due to holiday moratoriums, jumped by 35 percent over-the-month in January from 24,000 up to 33,000.

Serious delinquencies were also up over-the-month in January, from 1.62 million to 1.84 million (an increase of 14 percent), according to HOPE NOW. Foreclosure starts also jumped over-the-month by 6 percent, from 54,000 to 58,000.

“HOPE NOW members remain dedicated to helping those homeowners who are still in need of mortgage assistance,” said Eric Selk, Executive Director of HOPE NOW. “Our data indicates that the housing market is taking the necessary steps towards recovery. Although the foreclosure starts, sales and serious delinquency numbers increased in January, we usually see this trend in our historical data. Despite these jumps, over 102,000 homeowners received a home retention or non-foreclosure solution—a 4 percent increase from December. And although permanent modifications decreased in January, servicers continue to utilize other solutions such as repayment or retention plans to aid at-risk homeowners.”

Out of the permanent loan modifications completed in January, about 19,000 were completed through proprietary programs and 7,616 were completed through HAMP, according to HOPE NOW.