Distressed Property Programs Making a Bit of Progress

I do not report on national trends very often, because they often do not usually give an accurate picture of local trends, but this is a good general article on the distressed housing market, which seems to mirror what is happening locally.

Lenders are still a long way from doing what is needed, but there does seem to be a bit of progress in helping homeowners retain their homes.

June 22, 2010, 2:46 p.m. EDT
Modifications rise sharply on some mortgage loans
60-day-delinquent loans fall for first time in two years, Fannie and Freddie say
By Amy Hoak , MarketWatch
CHICAGO (MarketWatch) -- Loan modifications through the government's Home Affordable Modification Program tripled in the first quarter compared to the fourth quarter, according to data that covers loans held by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency said Tuesday.

Also, loans 60 or more days past due fell for the first time in two years, dropping by nearly 23,800 to about 1.7 million in the first quarter, according to the FHFA's latest quarterly Foreclosure Prevention & Refinance report.

Overall, the FHFA said various efforts to keep homeowners out of
foreclosure, including loan modifications, short sales and deeds-in-lieu,
rose 75% in the first quarter compared with the previous quarter, to a
total of 239,000 completed "foreclosure prevention activity" efforts.
Permanent mortgage modifications through the government's Home
Affordable Modification Program rose to 136,000 at the end of the first
quarter, up from 43,000 in the fourth quarter. Homeowners must
successfully complete a trial modification period in order to make their
modification permanent.

About 66% of modifications completed in the fourth quarter reduced
borrowers' monthly payments by more than 20%.
Meanwhile, cumulative refinance volume through the Home Affordable
Refinance Program rose 53% to nearly 291,600 at the end of the first
quarter, up from 190,180 in the fourth quarter. The program allows
existing Freddie and Fannie borrowers who are current on their
mortgage payments to refinance and reduce their monthly mortgage
payments at loan-to-value ratios up to 125%.

The Federal Housing Finance Agency regulates Fannie Mae, Freddie
Mac and the 12 federal home loan banks; the numbers in the report
don't reflect the Federal Housing Administration's efforts to prevent
foreclosures.

A broader view

Overall, the total number of homeowners receiving restructured mortgages since April 2009 increased to 2.8 million; also, half of homeowners unable to enter a permanent HAMP modification get an
alternate modification with their servicer, according to a separate report Monday from the Department of Housing and Urban Development and the Treasury Department.

The 2.8 million figure "includes more than 1.2 million homeowners who have started HAMP trial modifications and nearly 400,000 who have benefitted from FHA loss- mitigation activities," the report said. "Of those in the HAMP program, 346,000 have entered a permanent modification, saving a median of more than $500 per month," See HUD and Treasury's monthly housing scorecard.

"The good news is the industry is doing more than the government modifications," said Faith Schwartz, senior adviser for HOPE NOW, a private-sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "They start with the government mods to see if they fit."

Treasury Secretary Tim Geithner said in a news release Monday: "The Administration's housing policies, combined with actions of the Fed, have lowered mortgage interest rates, helped stabilize home prices and reduced the rate of foreclosures, repairing some of the damage caused by the financial crisis to the financial security of millions and millions of American families."

Separately, the percentage of loans in foreclosure or with at least one payment past due was a non-seasonally adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, according to a Mortgage Bankers Association report in May. That works out to about 6.2 million loans somewhere in the delinquency or foreclosure process. See story on 14% of mortgages delinquent or in foreclosure.