Tag Archives: Loan Modification

Servicers provided nearly 74,000 modifications for distressed homeowners in May, up from 70,000 in April, according to data from HOPE NOW, an alliance of mortgage servicers, investors, mortgage insurers, and nonprofit counselors. This raises the total for modifications to 6.47 million since 2007, which is when HOPE NOW began keeping track. Short sales also ticked up in May, rising slightly to 28,000, up from 27,000 in April. Since 2009, the industry has provided about 1.29 million short sales to help homeowners avoid foreclosure.

Principal forbearance, a loan modification practice in which a loan servicer allows a borrower to delay payment on his/her loan for a specified period of time, apparently poses an accounting conundrum. While some servicers report forborne principal as a loss at the time of the loan modification, others wait until the time of liquidation. Ocwen, Bank of America, Wells Fargo, and One West all report forbearance amounts as losses at the time of the loan modification.

In a recent announcement, Fannie Mae notified servicers of new policies related to Hardest Hit Fund (HHF) modification assistance programs.

Nearly 70,000 homeowners received permanent loan modifications in April, while foreclosure sales stood at 59,000 for the month, according to data from HOPE NOW, an alliance of mortgage servicers, investors, mortgage insurers, and nonprofit counselors. Since 2007, 6.39 million struggling homeowners have received permanent modifications, HOPE NOW reported. Completed short sales reached 27,000 in April--a slight adjustment from 28,000 in March.

After testing compliance among the five servicers part of the $25 billion national mortgage settlement, monitor Joseph A. Smith concluded more work needs to be done since issues with the loan modification process, providing a single point of contact, and customer records still persist. Under the settlement, Bank of America, JPMorgan Chase, Wells Fargo, Citi, and Ally Financial agreed to adopt some 300 servicing standards. To verify compliance with the servicing standards, the monitor retained outside firms to test the servicers in 29 metrics.

For homeowners facing a financial hardship, sometimes it can be difficult to know exactly what options might be available. To help homeowners get a better idea of what is out there, Freddie Mac released the Mortgage Help Navigator, a new online tool that assists homeowners with finding out what relief options might be applicable for them in their specific situation.

RedVision, a provider of title reports and real property research solutions, developed a new loan modification services bundle in response to the Obama administration's efforts to continue providing loan modifications for at-risk homeowners by extending the Making Home Affordable Program.

Among the available foreclosure prevention tools, short sales are becoming the weapon of choice for servicers while the use of loan modifications has slowed, data from Fitch Ratings revealed. For example, among bank servicers, the percentage of resolutions in the loan modification category decreased to 26 percent in the last half of 2012 from 57 percent in the first half of 2010, according to Fitch's latest quarterly index. Meanwhile, short sales showed significant increases over the last couple of years. In 2012, short sales represented 51 percent of resolutions for bank servicers, up from a low of 20 percent in 2010.

Freddie Mac is in the process of securitizing over $1 billion in performing loans that were modified. The modified loans have been performing for at least six consecutive months and were held in the company's mortgage portfolio. ""Securitizing loans that have been modified and are now performing will allow Freddie Mac to better manage its mortgage-related investments portfolio,"" said Adama Kah, Freddie Mac VP of distressed assets management.

As home values improve and servicers continue to ramp up efforts to reduce delinquent pipelines through short sales and loan modifications, the composition of RMBS loan pools outstanding should also improve, according to Moody's most recent ResiLandscape. According to analysts from Moody's, rising home prices motivate current borrowers to avoid default, and they increase the proportion of current loans with loan-to-value (LTV) ratios below 100, which are the loans that are the least likely to go incur losses.