Both new foreclosure actions and completed foreclosure sales took a dive in April after rising sharply the month before, according to industry data released Wednesday.
Foreclosure starts nationwide were approximately 163,000 in April, down 25 percent from 217,000 the prior month, reports the industry alliance HOPE NOW. An earlier assessment by the nonprofit group showed that new foreclosures had increased 21 percent over the February-to-March period.
Finalized foreclosure sales dropped to 73,000 for April, compared with 85,000 in March, representing a decrease of 14 percent. HOPE NOW’s last monthly report pointed to a 35 percent increase in completed foreclosures between February and March.
Loan modification stats showed the same give-and-take. For the month of April, mortgage servicers completed 57,000 permanent proprietary modifications, down 26 percent from 77,000 in March. From February to March, proprietary mods were up 26 percent.
HOPE NOW’s proprietary modification numbers include loans restructured through the private mod programs of individual lenders, Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA). The April data does not yet include loan modifications done under the Home Affordable Modification Program (HAMP), which have not been reported for the month.
HOPE NOW says characteristics of the completed proprietary mods remained strong, with more than half reducing principal and interest payments by at least 10 percent and three-quarters providing fixed interest rates of five years or more.
Looking at the performance of proprietary loan modifications over a 12 month period, HOPE NOW says approximately 20 percent of homeowners have re-defaulted after 90 days.
Data on recidivism is based on loans that have performed satisfactorily for at least six months before defaulting again and includes loans modified up to 18 months ago, HOPE NOW explained.
“The characteristics and performance of proprietary loan modifications have remained steady as we view this month’s data,” said Faith Schwartz, HOPE NOW’s executive director. “Performance has remained strong in the areas of principal and interest payment reduction, fixed rate offerings, and recidivism.”
Schwartz says servicers are using more tools at their disposal than ever before to create sustainable modifications for homeowners at risk. She notes, though, that not every homeowner will qualify for a loan modification.
According to HOPE NOW’s report, there were 2.69 million homeowners at least 60 days behind on their mortgage payments at the end of April.
Schwartz says the industry, the non-profit community, and the government have ramped up outreach efforts to educate distressed homeowners about their options, including those who aren’t eligible for a modification and those struggling with unemployment.
“HOPE NOW is convinced that the efforts of its public, private, and non-profit partners to assist at-risk homeowners are making a significant difference during this difficult time for the nation’s housing market,” Schwartz said. “We believe that each additional homeowner helped is worth the effort.”
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