June 3, 2011 (Shirley Allen)

The number of proprietary loan modifications declined in April 2011 according to HOPE NOW, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. The organization reports that 57,000 homeowners received permanent, proprietary loan modifications in April compared to 77,000 in March, a reduction of 26 percent.

Of the proprietary loan modifications completed, 82 percent (47,000) included reduced monthly principal and interest payments, with 53 percent (30,000) receiving a reduction of more than 10 percent. In addition, 78 percent (45,000) received fixed interest rate loans of five years or more.

Proprietary loan modifications include Fannie Mae, Freddie Mac, Federal Housing Administration (FHA), US Department of Veterans Affairs (VA) and does not include loans modified under the Home Affordable Modification Program (HAMP).

Foreclosure starts and sales also dropped in April as approximately 163,000 foreclosure starts were recorded, which was down from 217,000 in March, a decline of 25 percent. Completed foreclosure sales dropped from 85,000 in March to 73,000 in April, a decline of 14 percent.

Mortgage delinquencies that are at least 60 days past due increased slightly from 2.63 million properties in March to 2.69 million in April.

April’s data also shows that 80 percent of previous permanent proprietary loan modifications remained less than 90 days past due in the last year. Unfortunately that also means approximately 20 percent have re-defaulted, however, those figures very closely mirrored those seen in March.

Faith Schwartz, Executive Director of HOPE NOW, stated, “We are particularly encouraged by stable trends in recidivism, or re-defaults, on loan modifications. This is very significant since it illustrates that servicers have used more tools at their disposal than ever before – lower rate, extended terms and principal forbearance or write down – to create sustainable modifications for homeowners at risk.”

Tags: HOPE NOW, private sector alliance, mortgage servicers, loan modifications, fixed rate mortgages, delinquencies, proprietary modifications, foreclosure starts, foreclosure sales