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Retention Actions Down Overall, But Up As Share of Serious Delinquencies

mod-appNearly 62 percent of the approximately 952,000 homeowners who are 90 days delinquent on their mortgage loans but not in foreclosure have been through a home retention program such as a trial or permanent loan modification or a repayment plan, according to Black Knight Financial Services' April 2015 Mortgage Monitor released Monday.

While home retention actions have declined by 42 percent over the last two years, the share of home retention actions as a percentage of seriously delinquent inventory has increased by 9 percent during that same time frame, Black Knight reported.

Of the approximately 764,000 loans in active pre-sale foreclosure in April, 53 percent of them have been through a home retention program, according to Black Knight. Nearly 20 percent of seriously delinquent borrowers are in an active trial mod or repayment plan as of the end of April.

Also, about 70 percent of all new trial mod and repayment programs have previously been through one or more home retention actions, indicating a redundancy in retention actions. The percentage of repeat trial mods and repayment plans was only 45 percent four years ago in 2011, right after the height of the foreclosure wave.

In Q1 2015, Black Knight found that about 15 percent of seriously delinquent mortgage loans participated in a home retention program each month, while nearly 20 percent of serious delinquent borrowers were actively in an active trial mod or repayment plan at the end of April. Home retention actions included permanent proprietary mods and permanent mods through the government's Home Affordable Modification Program (HAMP).

"In analyzing the data around home retention initiatives, we found that nearly one in five seriously delinquent borrowers are currently taking part in an active trial modification or payment plan," Black Knight Data & Analytics
SVP Ben Graboske said. "With 62 percent of loans 90 or more days delinquent but not yet in foreclosure having been through some form of home retention action, we’re currently seeing the highest level of saturation yet, but that’s only marginally up from last year – in other words, that saturation level is beginning to flatten."

Washington, D.C. led the nation in share of seriously delinquent inventory having gone through a home retention program with 67 percent, though only 26 percent of those are currently in an active trial mod or repayment plan. Maryland, Georgia, Texas, and Connecticut all tied for second place with 66 percent of seriously delinquent inventory having gone through a home retention action.

Meanwhile, about 480,000 out of the 1.7 million residential mortgage loans that are either seriously delinquent or currently in foreclosure (about 28 percent) are located in three states – Florida, New York, and New Jersey.

"Of these three states, Florida has seen the most improvement, with a 37 percent decline in inventory over the last year, and a 63 percent drop over the last two years," Graboske said. "On the other hand, low foreclosure completion rates in New York and New Jersey have contributed to lingering inventory in those states. Looking at pipeline ratios – the length of time it would take to work through the backlog at the current rate of foreclosure completions – we see New York and New Jersey with nearly 13 and nine years of inventory, respectively. Even though Florida peaked with 20 percent of the entire state being 90 or more days past due, its pipeline ratio was never longer than 10 years and is currently the lowest among all the judicial foreclosure states at just under three years."

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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