Hope Now Sees Slower Climb in Repayment Plans
HOPE NOW, the private sector alliance of mortgage servicers, non-profit counselors and investors touted 249,000 completed workout solutions for struggling borrowers in May. The figure represents a 4% decline from April. Modifications slipped 16.3% from April while repayment plans -- including refinancings -- rose 6.1% in May after jumping 21.45% in April, indicating at least some slowing in the volume of refis rolling out of the pipeline. The alliance attributed the drop in modifications and rise in repayments in May to the administration's Making Home Affordable modification and agency refinance programs. Under the government requirements for the Home Affordable Modification program (HAMP), loans are subject to a three month trial period before a modification can be completed. The alliance noted a number of workouts currently reported as repayment plans or trial mods may end up being modifications. “While workouts dipped slightly in May, it is fully expected those numbers will increase as the industry and the Obama administration implement the Making Home Affordable program and as mortgage servicers continue to ramp-up to meet growing consumer needs and address the complexities of the government’s home retention efforts," said Faith Schwartz, executive director of the alliance. The industry initiated 32.1% more modifications among subprime borrowers than in April, while modifications among prime borrowers fell more than 13%. For every one prime mortgage foreclosure, the industry initiated 2.6 workout plans; and for every one subprime mortgage foreclosure, the industry initiated 2.61 workouts. Foreclosure sales are still up despite the industry's efforts, jumping 31.5% in May after rising almost 19% the month before. Foreclosure starts rose to 257,000 in May from 243,000, while completed foreclosure sales rose to 83,000 from 63,000 in April. Write to Diana Golobay.