Loan servicers participating in the voluntary HOPE NOW coalition say they initiated repayment plans or modified the loan terms of two of every three delinquent subprime borrowers in the second half of 2007 — almost twice the rate of success previously reported.

The new findings were based on revised data that included more complete participation of members of the HOPE NOW alliance, according to a press release announcing the release of the survey.

The survey of loan servicers responsible for collecting payments on 33.3 million loans also found that foreclosure starts outnumbered foreclosure sales about 3 to 1, suggesting most borrowers who are foreclosed on are able to avoid losing their homes, at least temporarily.

Members of the HOPE NOW alliance have adopted standardized procedures intended to streamline the process of engaging in loan modifications, including freezing the interest rates of adjustable-rate mortgages, in an attempt to prevent foreclosures (see Inman News story).

The latest survey gauging the results of the HOPE NOW initiative included data from 14 loan servicers that, as of last September, were handling payments for about 62 percent of the 53.4 million outstanding U.S. residential mortgages.

The survey estimated that foreclosure starts increased 31 percent among prime loans and 56 percent for subprime loans between the first and fourth quarters of 2007. Extrapolating trends reported by HOPE NOW members to the industry as a whole, there were an estimated 1.5 million foreclosure starts in 2007, including 890,000 on properties purchased with subprime loans.

The survey found that there was only about one foreclosure sale for every foreclosure start, a rate that remained steady throughout the year and held true whether a loan was prime or subprime.

The survey also included results from 10 companies servicing 29 million prime loans, or about 63 percent of the estimated 46.4 million outstanding prime loans.

According to the survey, the percentage of all loans delinquent by 60 days or more rose from 2.1 percent during the first quarter to 2.9 percent in the fourth quarter.

The increase in delinquencies in prime loans, which stood at 1.1 percent during the first quarter, was most pronounced in the fourth quarter, when it increased by 23 basis points to 1.5 percent. Delinquencies in subprime loans grew from 8.23 percent in the first quarter to 12.37 percent in the fourth quarter.

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