Members of the HOPE NOW coalition of mortgage loan servicers say they arranged workouts with 183,000 troubled borrowers in April — a 14 percent increase from March and the largest monthly total since the program was launched in July 2007.
The workouts accomplished in April for both prime and subprime borrowers included 106,000 repayment plans and 77,000 loan modifications. The group said HOPE NOW loan servicers have now engaged in 1.56 million workouts, in which lenders agree to repayment plans, loan modifications or other measures to avoid foreclosure.
The group said interest rates on 603,000 subprime hybrid adjustable-rate mortgage (ARM) loans were scheduled to reset in the first four months of the year. Of those loans, 5 percent have been modified — most for five years or longer. Another 273,000 loans, or 45 percent, were paid in full as the homeowner refinanced the loan or sold the property.
Of loans that were current when they reset, only 927, or 0.3 percent, have started the foreclosure process, the group said — evidence that lower short-term interest rates have reduced some of the "payment shock" associated with ARM loans.
A working group of state banking regulators and attorneys general has questioned the effectiveness of the lending industry’s loss mitigation efforts, saying only about one in four troubled borrowers were being diverted from the foreclosure process at the beginning of the year, a rate unchanged from last fall.
The State Foreclosure Prevention Working Group has issued two reports on the issue, and has called on lenders to slow down the foreclosure process to give loan servicers coping with large volumes of delinquent loans time to consider loan modifications (see story).
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