Tag Archives: Loss Mitigation

Both GSEs have made a substantial push in the last year to follow the directive of their conservator, the Federal Housing Finance Agency, to excise NPLs and deeply delinquent loans from their residential mortgage portfolios.

HUD's Distressed Asset Stabilization Program has come under fire recently, but are all the criticisms warranted?

The loans are three years delinquent on average and approximately one-third of them have previously been modified and subsequently became delinquent.

Borrower outreach events include HUD-approved housing counselors and mortgage servicers in order to give distressed borrowers a face-to-face meeting to work out a solution such as a permanent loan modification that will allow borrowers to remain in their homes. If a home retention solution cannot be worked out, often a non-foreclosure home forfeiture solution is offered such as a short sale or deed-in-lieu of foreclosure.

According to similar releases from the GSEs, starting on November 13, 2015, Fannie Mae will lower its standard modification interest rate from 4 percent to 3.875 percent. Meanwhile, Freddie Mac will lower its standard modification interest rate by the same amount beginning on November 5, 2015.

The research found that 31 percent of borrowers had not talked to their servicer/lender, 28 percent did not believe their servicer could help them, yet 74 percent (nearly three-quarters) said they would talk to a housing counseling agency, yet 38 percent of the homeowners who were surveyed did not know that counseling was available to them.

The challenge most reported by counselors in NFMC's report was efficient and timely communication with servicers (38 percent), which is down slightly from 40 percent in the NFMC's report from October 2013.

It has enabled the industry to evolve its loss mitigation norms by helping to define a process that uses income to drive to a specific debt-to-income level, and it is likely that modifications beyond HAMP will continue to occur on this basis.

According to Treasury's Making Home Affordable Program Performance Report for Q1 2015, approximately 2.3 million homeowners had started HAMP trial modifications in the six-year existence of the program.

For Q2, the number of workout solutions outpaced completed foreclosures by the count of 411,000 to 89,000, which calculates to an average of 4.6 solutions for every foreclosure sale during the quarter.