Prime Mortgages Dominate Workout Efforts
Mortgage industry professionals saw a record number of mortgages enter some form of workout plan in April as foreclosure moratoriums at government-sponsored enterprises began to expire. Prime mortgages now account for more than half of the industry's efforts. The mortgage industry modified 127,000 mortgages in April, down from 133,910 a month earlier. With another 142,831 mortgages in repayment plans, the industry put a record 269,831 mortgages in workout during the month, according to a survey conducted by HOPE NOW, the alliance of mortgage industry professionals. The industry's efforts to implement the Administration's Making Home Affordable Modification Program (HAMP) led to a decrease in completed modifications and an influx in repayment plans in April, according to the alliance. "Under the conventions of the HAMP, loans are subject to a three-month-trial period before a modification can be completed and, therefore, are often classified as repayment plans or trial modifications," HOPE NOW officials said in a release today. "Some of these trial modifications will result in formal reporting of modifications after 90 days. As a result and, as expected, the number of repayment plans increased and the number of modifications decreased from what otherwise might have been recorded." Prime mortgages continued a growing trend in April. Prime mortgages accounted for 55% of all workouts, up from 48% in March, according to HOPE NOW’s data. Despite the trend, as HOPE NOW’s data show a slight cooling of workout efforts in the prime category. In April, there were 3.85 prime mortgage workouts to every one prime foreclosure — down from 4.28 prime workouts to each prime foreclosure in March — and 4.63 subprime mortgage workouts to every one one subprime foreclosure in April, down from 5.18 subprime workouts to every subprime foreclosure in March. Completed foreclosure sales inched up 23% in April after falling 40% the previous month, while repayment plans rose 24% and modifications slipped 5% from last month’s figure. Total prime workout plans increased 26% from March, while the industry placed 7% fewer subprime mortgages into workout plans this month than last month. Write to Diana Golobay.