Mortgage servicers participating in the HOPE NOW alliance boosted loan workouts by 25 percent from May to June, helping the number of workouts to exceed foreclosure starts for the month for the first time since April.
More than two out of three of the 310,000 loan workouts accomplished in June were categorized as repayment plans, rather than loan modifications that reduce borrower’s payments and are considered less likely to redefault.
But many of the workouts classified as repayment plans were, in fact, trial loan modifications undertaken under the Home Affordable Modification Program (HAMP), and will eventually be reported as loan modifications if borrowers remain current after 90 days, HOPE NOW said in announcing the numbers for June.
The Obama administration has said it hopes to have 500,000 HAMP trial loan modifications in place by Nov. 1. The administration has said some loan servicers are doing a better job than others in placing borrowers eligible for the HAMP program into trial loan modifications, and will begin reporting individual companies’ results beginning Aug. 4 (see story).
HOPE NOW said loan servicers modified 96,000 mortgages in June, a 5.1 percent drop from May, but boosted the number of borrowers placed in repayment plans by 44.9 percent, to 214,000.
Although foreclosure starts decreased by 1 percent from May to June, to 254,000, the number of mortgages delinquent by 60 days or more grew by about 3 percent, to 3.1 million.
Completed foreclosure sales were also up 13 percent, to 94,000, with sales of homes purchased with prime loans outnumbering sales of homes purchased with subprime mortgages by two-to-one.
Since the HOPE NOW alliance’s inception in July 2007, loan servicers have initiated 4.7 million workouts, including 1.86 million loan modifications. During the same period, there have been 1.68 million foreclosure sales.
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