Yesterday a meeting was held between top representatives of the Treasury Department and the Department of Housing and Urban Development, and representatives of the mortgage servicing industry.
Financial Services Committee Chairman Congressman Barney Frank (D-MA) today said that meeting was reported to be productive, and there is expected to be a significant increase in the number of mortgage modifications. However, Congressman Frank expressed disappointment in these institutions regarding mortgage modifications so far. He said that if progress is not seen, more drastic legislative measures will be on the agenda.
HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors, announced today that in June the mortgage lending industry a 25 percent increase in workout solutions over May.
HOPE NOW members are seeing a slight drop in mortgage modifications, with a 5.1 percent drop since May, but a large increase in repayment plans, which have seen a 44.9 percent increase since May.
The drop in the number of modifications and increase in repayment plans from May is largely attributed to Obama administration’s home retention program. Under the requirements for the Home Affordable Modification plan, loans are subject to a three month trial period before a modification can be completed. Many of these trial modifications will result in formal reporting of modifications after 90 days.
Financial Services Committee Chairman Barney Frank’s Statement:
“Congress has provided every legislative tool recommended by people in the mortgage industry, and in the administration, that we were told would be helpful in facilitating the modifications we need to diminish the flood of foreclosures which has been so much a part of our national economic problem. The one measure that did not survive the process was the right of individuals to declare bankruptcy for their personal residences, and while many of us strongly supported this and it passed the House, in the Senate the argument that it would be destructive and was unnecessary to achieve modifications succeeded. But the evidence to date does not bear out that latter point: people in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different. I can assure all concerned that no legislation which we are asked to pass to facilitate the full return of the lending industry to the role it should be playing in the economy will pass out of the Financial Services Committee unless we see a significant increase in mortgage modifications and foreclosure-avoidance, or the legislation includes a bankruptcy provision for primary residences.”
Full Press Release from HOPE NOW:
HOPE NOW REPORTS 25 PERCENT SURGE IN LOAN WORKOUTS DURING JUNE
Washington, D.C. (July 29, 2009) – HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors, announced today that in June the mortgage lending industry helped 310,000 homeowners complete workout solutions to stay in their homes – a 25 percent increase over May.
In June, HOPE NOW members and the mortgage lending industry modified
96,000 mortgages compared to 101,000 in May, a 5.1 percent drop and initiated 214,000 repayment plans up from 148,000 in May, a 44.9 percent increase. Since January, 2009, more than 1.5 million homeowners have been helped through mortgage workout plans.
For a second straight month, HOPE NOW’s participating servicers in June reported a slight drop in modifications and a significant increase (over 40%) in repayment plans. This increase is primarily attributed to servicer participation in the Obama administration’s Home Affordable Modification program (HAMP).
“I am proud of the continued progress made by HOPE NOW Servicers and am confident that they are aggressively and proactively using HAMP, as well as other successful foreclosure prevention programs, to help as many homeowners as possible,” said Faith Schwartz, Executive Director of HOPE NOW Alliance. “We continue to work with the administration on the successful implementation and outcome of HAMP for at-risk homeowners. These efforts are in the best interest of consumers as well as the U.S. economy overall.”
There were 93,924 foreclosure sales in June, an increase of more than 13% from the prior month. For the first time since HOPE NOW began collecting data, prime foreclosure sales in June outpaced subprime sales by two-to-one. HOPE NOW survey data suggests a peak in subprime foreclosure sales occurred a year ago, Q2-2008. The largest gain in reported prime loan foreclosure sales occurred in the recently ended second quarter of 2009 at 154,108.
As HOPE NOW reported last month, the drop in the number of modifications and increase in repayment plans from May is largely attributed to the industry’s implementation of the Obama administration’s home retention program. Under the government requirements for the Home Affordable Modification program (HAMP), loans are subject to a three month trial period before a modification can be completed. Therefore, a number of workouts that will end up being modifications can currently only be reported as repayment plans or trial modifications. Many of these trial modifications will result in formal reporting of modifications after 90 days.
“The unique partnership between the mortgage servicing industry, investors, mortgage insurers, non-profit groups and the administration is productive and offers a great deal of hope and promise for the growing number of borrowers facing hardship,” said Schwartz. “As we all work together to help Making Home Affordable a success, servicers are using new technologies and partnerships to better streamline the process.
The HOPE NOW June data shows:
- 1.5 million homeowners have been helped with workouts since January, 2009
- Modification and repayment plans increased to 310,000
- 60 day plus delinquencies increased from about 3.0 to almost 3.1 million.
- Foreclosure starts decreased slightly from 257,000 in May to 254,000 in June.
- Completed foreclosure sales increased from 83,000 in May to 94,000 in June.
HOPE NOW consumer outreach events have helped over 15,000 consumers since January 2009. Last week, HOPE NOW and its partners hosted an outreach event with administration and local officials in Las Vegas to help more than 1,500 at-risk homeowners meet directly with lenders and non-profit counselors to identify programs to address each homeowner’s unique situation. The next outreach event will take place in Phoenix July 31 and August 1.
HOPE NOW is the industry-created alliance of mortgage servicers, investors, counselors, and other mortgage market participants that has developed and is implementing a coordinated plan to help as many homeowners as possible prevent foreclosure and stay in their homes. For more information, go to www.HopeNow.com.
The Homeownership Preservation Foundation, a HOPE NOW member, created and operates the Homeowner’s HOPE™ Hotline, which is available 24 hours a day, 7 days a week, and 365 days a year. The Homeowner’s HOPE™ Hotline received 1.1 million calls in 2008. There is no cost to homeowners for contacting a nonprofit counselor by calling 888-995-HOPE.