Specific Findings: 1. Seven out of ten seriously delinquent borrowers are still not on track for any loss mitigation outcome. While the number of borrowers in loss mitigation has increased, it has been matched by an increasing level of delinquent loans. The number of home retention solutions (forbearance, repayment plan, and modification) in process, as compared to the number of seriously-delinquent loans, is unchanged during the four month period. The absolute numbers of loss mitigation efforts and delinquent loans have increased, but the relative percentage between the two has remained the same. Given creative servicer outreach efforts and increased public awareness of the HOPE Hotline during this time period, this large gap suggests a more systemic failure of servicer capacity to work out loans. 2. Data suggests that loss mitigation departments are severely strained in managing current workload. For example: a. Almost two-thirds of all loss mitigations efforts started are not completed in the following month. Most loss mitigation efforts do not close quickly. This consistent trend over the last three months suggests that many proposed loss mitigations fail to close, rather than simply take longer than a month to work through the system. Based on anecdotal reports of lost paperwork and busy call centers, we are concerned that servicers overall are not able to manage the sheer numbers of delinquent loans. b. Seriously delinquent loans are “stacking up” on the way to foreclosure. The primary increases in subprime delinquency rates are occurring in very seriously delinquent loans or in loans starting foreclosure. This suggests that the burgeoning numbers of delinquent loans that do not receive loss mitigation attention are clogging up the system on their way to foreclosure. We fear this will translate to increased levels of vacant foreclosed homes that will further depress property values and increase burdens on government services. 3. For those homeowners receiving loss mitigation assistance, more are receiving loan modifications. Two-thirds of home retention solutions started in January were directed to loan modification, showing a continued shift to longer-term solutions for homeowners that receive loss mitigation assistance. Many servicers are replacing their use of repayment plans in favor of loan modifications. The Foreclosure Fraud Alert Website http://www.foreclosurefraudalert.com/ The Foreclosure Fraud Alert Blog http://www.foreclosurefraudalert.com/fraudblog |
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