Foreclosure starts continued to fall in April: Hope Now
Foreclosure starts and loan modifications fell nationwide between the months of March and April, according to Hope Now, a voluntary alliance made up of mortgage servicers, investors and housing counselors. When breaking down the numbers, Hope Now reported that foreclosure starts fell 25% from 217,000 in March to 163,000 in April. For the first quarter of 2011, foreclosure starts dropped to roughly 600,000, down 8% from the fourth quarter. But totals remained well above modifications. In May, Hope Now reported mortgage servicers completed 209,806 private modifications in the first quarter, down 19.7% from the previous period. Meanwhile, completed foreclosure sales fell 14% between the two months, hitting 73,000 in April. Permanent proprietary loan modifications for homeowners also fell from 77,000 in March to 57,000 in April, a 26% drop. "We are particularly encouraged by stable trends in recidivism, or re-defaults, on loan modifications," said Hope Now executive director Faith Schwartz. "Our data shows that permanent proprietary loan modifications remained less than 90 days past due for 80% of the modifications, based on data reported from May 2010 to April 2011." When looking at loan modifications at the granular level, 82% were saved through a combination of principal and interest payment reductions, 78% had their interest rates fixed for five years or more and about 53% had reduced principal and interest payments that were 10% or greater, according to the report. The recidivism rate of default after a loan modification hovered at 20% in the past 12 months, which means 20% of all modified loans defaulted within 90-days of a loan's correction. Write to Kerri Panchuk.