|
Major findings of the Foreclosure Working Group third
report:
-
Nearly eight out of ten seriously delinquent
homeowners are not on track for any loss mitigation
outcome. Previously, seven out of ten
homeowners were not on track for any loss mitigation
outcome. “This already disappointing ratio has become
even worse, with 40,000 fewer loans in loss mitigation
in May 2008 than in January 2008,” the report said.
-
New efforts to prevent foreclosures are on
the decline, despite a temporary increase in loan
modifications through the 2nd Quarter of
2008. The number of homeowners working
toward a loan modification has fallen to a level not
seen since late in 2007, the report said. This 28%
decline of loan modifications in
process between January and May stands in
stark contrast to the 51% increase in loan
modifications closed over this same
period. This declining trend of new loans in
process suggests that current loan
modification approaches have been tailored to a limited
group of homeowners. Instead of expanding loan
modification options to reach a broader set of
homeowners, more loss mitigation is being directed to
selling homes short of foreclosure. In January,
modifications in process outnumbered short sales in
process by four to one; in May, that ratio had dropped
to two to one.
-
One out of five loan modifications made in
the past year is currently delinquent.
The high number of previously-modified loans currently
delinquent indicates that a significant number of
modifications offered to homeowners has not been
sustainable. Recent reports identify that many loan
modifications are not providing any monthly payment
relief to struggling homeowners. We are concerned that
unrealistic or ‘band-aid’ modifications have only
exacerbated and prolonged the current foreclosure
crisis, the report said.
-
Three hundred thousand subprime loans are in
the process of foreclosure as of the end of May
2008. Thirty-eight percent (38%) of
seriously delinquent subprime loans are in the process
of foreclosure, with over 131,000 foreclosures
completed on subprime loans in May 2008 alone.
| 
