HOPE Now Nears 5 million Loan Modification Mark

HOPE Now, which was the first program initiated to deal with the mounting foreclosure problem in 2007, has reached a level of 4.86 million loan modifications. HOPE is a voluntary private sector alliance of mortgage servicers, investors, private mortgage insurers and non-profit housing and debt counselors.

HOPE reports there were 56,000 permanent modifications of proprietary loans during August,  unchanged from the July rate. This brings the total of proprietary modifications since 2007 to 4.06 million. An additional 791,399 modifications were completed up to the end of July through the Home Affordable Modification Program (HAMP), a joint initiative of the Departments of the Treasury and Housing and Urban Development.

To date this year HOPE has completed 690,000 permanent loan modifications.  An estimated 478,000 of these were proprietary and 211,749 were completed under HAMP with August HAMP totals not yet tabulated.

Completed foreclosure sales increased in August from 65,000 to 68,000 (+5 percent) and foreclosure starts increased 18 percent from 185,000 in July to 218,000 in August. Sixty plus day delinquencies were up only slight from July figures at 2.81 million.

Reduced principal and interest payments accounted for approximately 83 percent of modifications in August and 38,000 loans were modified with reductions in principal and interest payments of more than 10 percent.  Eight-three percent of proprietary modifications in August were fixed-rate with initial periods of five years or more.

Faith Schwartz, Executive Director, reports, “HOPE NOW’s servicing partners continue to complete permanent loan modifications at a rate consistent with past months – in spite of tremendous negative impact of the continued housing and unemployment crisis. And, in cases where modifications are not possible, the industry is working hard to educate at-risk homeowners about the options available to them.”

Related articles

• HAMP Loan Modifications Performing Well (youngenvied.com)
• Freddie Mac Finalizes New Modification Option (michael-mcdevitt.com)

Freddie Mac Finalizes New Modification Option

Freddie Mac finalized requirements for a new modification option that will be made available to qualified borrowers on Oct. 1.

Mortgage servicers must evaluate borrowers deemed ineligible for the larger Home Affordable Modification Program for the new “Standard Modification” beginning in January. Trial period plans can begin in October. Through the new program the borrower‘s principal and interest payments drop at least 10%, according to Freddie.

Since March 2009, servicers granted roughly 791,000 permanent HAMP modifications and extended more than 1.6 million trials through the national program. But servicers canceled more than 763,000 trials because of redefault, not enough documentation or the borrower did not meet the requirements.

In order for a borrower to qualify for a standard modification, he or she must be at least 60 days delinquent. If they’ve missed fewer payments or are current, he or she must be an owner-occupant, in imminent default and provide a hardship document.

The borrower must have already been evaluated for HAMP within 12 months of the Standard Modification. Mortgages on homes without an owner-occupant can be eligible, even vacant homes that cannot be condemned.

The loan-to-value ratio of the mortgage must also be greater than 80%.

Servicers will receive $1,600 for each modification completed before the loan slips into 120-day delinquency. They get $1,200 for a modified mortgage between 120- and 210-days behind. For standard modifications completed after 210 days of missed payments, the servicer gets $400 from Freddie.

The standard modification program will fall under the joint servicing alignment initiative launched in April.