Fewer Loan Modifications Approved


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The number of homeowners obtaining mortgage loan modifications has dropped by nearly one-third over the past year, falling faster than the decline in mortgage delinquencies and foreclosures. 

Just over 207,000 mortgage borrowers obtained loan modifications in the first quarter of the year, a 31 percent decline from the more than 298,000 who received them in the first quarter of 2011. During the same period, the rate of new foreclosure starts and 60-day mortgage delinquencies fell by 8.1 percent and 7.2 percent, respectively.


The figures were reported today by the Hope Now Alliance, an initiative of the mortgage industry and U.S. government to address the foreclosure crisis.


About 30 percent of all loan modifications were done through the federal Home Affordable Modification Program (HAMP), essentially unchanged from one year ago. The rest were proprietary modifications conducted by lenders following their own private guidelines rather than those of HAMP.


A significantly higher share of borrowers getting proprietary modifications saw their principal and interest payments reduced compared to one year ago. Seventy-two percent of private modifications reduced the borrower's monthly payments by at least 10 percent, compared to 57 percent in the first quarter of 2011.


One of the differences between HAMP modifications and proprietary modifications is that under HAMP, a borrower's monthly payments must be reduced, while private modifications may restructure a mortgage in ways that do not always reduce a borrower' payments and sometimes increase them.


The report said there were a total of 545,000 foreclosures begun in the first three months of 2012, down from 591,000 in the first quarter of 2011. Sixty-day delinquencies averaged 2.64 million in the first quarter of 2012, down from 2.86 million one year earlier.





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This article appears in: Personal Finance Banking and Loans
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