HOPE NOW: February Loan Modifications Up

HOPE NOW, Washington, D.C., said permanent loan modifications rose slightly in February as foreclosure starts and delinquencies fell.

HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors of which the Mortgage Bankers Association is a founding member, reported 30,000 permanent loan modifications in February, up slightly from 29,000 in January. The report estimated 20,000 modifications through proprietary programs and 9,445 completed via the federal government’s Home Affordable Modification Program. From a year ago, 27,000 modifications took place.

The report said February non-foreclosure actions (total loan modifications, short sales, deeds in lieu and workout plans) totaled 95,000, compared to 22,000 foreclosure sales. Since HOPE NOW began reporting data in 2007, total non-foreclosure actions reached 26.2 million; permanent loan modifications totaled 8.2 million.

Other key report metrics:

–Loan Modifications: 30,000 completed in February vs. 29,000 in January.

–Short sales: 3,500 completed in February vs. 3,700 in January, a decrease of 5%.

–Deed in-lieu: 1,100 completed in February vs. 1,200 in January, a decrease of 10%.

–Foreclosure starts: 49,000 in February vs. 55,000 in January, a decrease of 12%.

Foreclosure sales: 22,000 in February vs. 26,000 in January, a decrease of 17%.

Serious delinquencies: 1.33 million in February vs. 1.46 million in January, a decrease of 9%. Delinquency data is extrapolated from data received by the Mortgage Bankers Association for fourth quarter 2016.

The full data set for February is available at www.hopenow.com.

“Non-foreclosure solutions outpaced foreclosure sales by more than a four-to-one margin in the month of February,” said Eric Selk, HOPE NOW Executive Director. “This has remained a steady trend for the past year and illustrates the availability of various long- and short-term solutions that benefit homeowners. Foreclosure starts and sales continue to decline towards pre-crisis levels while solutions and permanent mortifications remain stable.”

HOPE NOW includes data fields on resetting modifications in the February report. The data focus on those modifications that experience a rate increase. As part of a modification agreement, the interest rate of those modifications will slowly increase back to the interest rate at the time of the modification agreement. Data are reported on three fields: number of modifications that experienced a rate reset in that month, number of foreclosure alternative solutions for loans that experienced a rate reset since 2014 and number of foreclosures on loans that experienced a rate reset since 2014.

Early data indicate that of those loans that experience a rate reset and become delinquent, 90 percent receive some alternative solution to foreclosure. The resetting modification data is difficult to track as HOPE NOW membership only represents a portion of the industry activity. The report is meant to help demonstrate the value of modifications to families who are struggling and the amount of assistance that is available for modifications that go delinquent.

“We hope this report helps to illuminate the hard work and multiple solutions that are brought to bear when a family goes delinquent on their loan,” Selk said. “The good news is that 90% of the families who have a modification that is resetting and goes delinquent, will avoid foreclosure.”