Mortgage Servicers Promise to Boost Loan Modifications

A number of leading mortgage servicers have pledged to accelerate their loan modification efforts following a meeting with administration officials in Washington Tuesday, the U.S. Treasury Department reports.

The meeting, according to U.S. Treasury Secretary Timothy Geithner, provided an opportunity for officials and industry leaders to find new ways to step up the program. Geithner added that too many homeowners remain at risk, and the new solutions will help relieve them faster.

The Making Home Affordable program has resulted in over 200,000 loan modifications since its launch, a far cry from its initial goal of 4 million borrowers. The government has since reworked its goals and plans to bring the number up to 500,000 by November.

Mortgage Bankers Association (MBA) spokesman John Mechem said that servicer CEOs and government officials agreed to refine the loan modification process and set more consistent rules on handling applications, particularly those backed by Fannie Mae and Freddie Mac.

During the meeting, a number of representatives also criticized the numerous “piecemeal changes” made by the administration since the program’s launch, according to MBA chief economist Jay Brinkmann.

Brinkmann added that such programs should not be announced before they are fully planned out. He said that they bring in lots of calls from curious borrowers, which clogs their call centers and slows down other services.

Making Home Affordable is carried out by banks that received federal assistance from the Troubled Asset Relief Program (TARP), including Fannie Mae and Freddie Mac. The plan requires them to modify the loans of at-risk borrowers to reduce their monthly payments, either through term extensions, forbearance, and lower interest rates.

Report Shows Loan Modification Program May Fall Short of Goals

Congressional investigators fear that the Obama administration’s $50-billion loan modification program may not meet the assistance goals it had promised during the launch in February.

According to the Government Accountability office, the projections to help up to 4 million troubled homeowners may have been “overstated”, having been based on unproven assumptions about the housing market and the U.S. economy.

The report revealed that about 50% of delinquent borrowers were likely to sign up for the mortgage modification program, as opposed to the 65% estimated by the Obama administration in March. As of late July 2009, only 31 mortgage companies had joined the initiative and about 180,000 borrowers had received trial loan modifications.

Since the program’s launch, foreclosures and defaults have continued to rise nationwide. According to real estate information provider RealtyTrac Inc, the number of at-risk households rose by almost 15% during the first half of the year, mostly because of unemployment. Experts believe the rise will continue until mid-2010.

Herbert Allison, the U.S. Treasury assistant secretary for financial stability, issued a statement admitting that it was hard to estimate the reach of the loan modification program. He added that the government plans to update the projections on the program’s cost and participation rate.

The government has been actively urging participating servicers to beef up their efforts by hiring more staff and improving personnel training. Housing Secretary Shaun Donovan and Treasury Secretary Timothy Geithner are scheduled to meet with company executives Tuesday, and are planning to make detailed performance reports on each company starting next month.

Loan Modification Delays Slow Down Housing Rescue Plan

President Obama’s loan modification plan has helped far fewer homeowners than expected since the program’s launch in March, officials reported today. According to the report, about 325,000 borrowers have received loan modification offers, a far cry compared to the more than 1 million foreclosures filed in the same period.

Of these, about 160,000 are in the trial or permanent stages, while more than half are still in the offer stage. Officials are still not sure how many borrowers have passed the trial phase and received mortgage modification offers.

The trial phase is a three-month period during which the servicer determines whether a borrower can stay current on the reduced payments. The loan modification becomes permanent once the borrower passes the trial terms.

Experts and homeowners alike point to misleading information and long delays in the process as the main reason for the program’s slow start. Some believe the foreclosures will continue even if the program picks up.

Others insist that loan modifications are simply too labor-intensive. According to Joel Naroff of Naroff Economic Advisors, it mostly depends on how willing or able a servicer is to take on the responsibility. He also added that foreclosures cannot be prevented unless other problems such as unemployment are duly addressed.

The government is now urging participating mortgage servicers to speed up the process by hiring more staff, improving training, and expanding their call centers. It also plans to start publishing monthly reports on each servicer’s performance starting August 4. The 27 servicers are expected to discuss the plan with officials in Washington on July 28.

Foreclosure Freezes Didn't Help Borrowers | Foreclosure News

Foreclosure Freezes Didn't Help Borrowers | Foreclosure News

The foreclosure moratoriums imposed by several lenders late last year did little to stop the rise of mortgage defaults and may even have worsened the problem, due diligence analyst Clayton Holdings said in a report today.

According to the report, 93% of the cases stalled by the moratorium still went into foreclosure by April, as soon as the ban was lifted. Many were also moved to real estate owned (REO) status, wherein the property is effectively owned by the bank.

For servicers who did not impose a foreclosure freeze, 89% of the cases expected to end in auctions by March remained in the foreclosure process or in REO.

Loan Modification Explained

If you have trouble paying your loan then check whether you are eligible for loan modification. Even unemployed homeowners with a source of income qualify for a loan modification. Here is a presentation explaining the loan modification facts.

Loan-Modification

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Loan Modification Up 57% in Q1 – FHFA

Mortgage servicers Fannie Mae and Freddie Mac granted loan modifications to over 37,000 homeowners in the first quarter of 2009, a figure 57% higher than that of late 2008.

In its latest Foreclosure Prevention Report, the Federal Housing Finance Agency (FHFA) showed that 52% of loan modification agreements resulted in reductions of over 20%, compared to a mere 2% in the last quarter.

The report also showed that about 87,000 foreclosure prevention actions (including loan modification, forbearance and repayment plans) were completed in the first quarter, a 20% increase from late 2008 and more than twice the volume from this time last year.

Delinquent mortgages were also on the rise, but the FHFA claims it is still below the industry average of 9.2%. By the end of the first quarter, 3.6% of GSE mortgages were at least two payments behind, compared to 6.1% of Veterans’ Affair and 10.2% of Federal Housing Administration (FHA) loans.

Serious delinquencies—mortgages more than 90 days overdue or already in the bankruptcy or foreclosure process—were also slightly on the rise. The numbers rose from 2.1% in the last quarter of 2008 to 2.8% in the first quarter of 2009, nearly three times the volume one year ago.

FHFA Director James B. Lockhart encourages mortgage servicers to continue working with borrowers and aggressively help those who qualify. He says that these loan modification efforts are crucial to the stabilization of both the economy and the housing market.

The figures include loan modifications granted under the Streamlined Modification Program, launched in November 2008. The figures do not include the loan modification volumes from the Home Affordable Modification Program (HAMP), as it was still in development by mid-quarter. More Loan Modification News