Real Estate Central

WASHINGTON, July 2 /PRNewswire-USNewswire/ — HOPE NOW claims in a
press release today that the mortgage lending industry’s program of
facilitating voluntary workouts for distressed mortgage holders has helped
1.7 million borrowers stay in their homes. Once again, a closer look at
HOPE NOW’s data shows these numbers greatly overstate the help being
provided and that the foreclosure crisis continues to accelerate and
overwhelm industry’s voluntary attempts to renegotiate unaffordable home
loans.

HOPE NOW servicers have been at this for a year now. Clearly they have
failed. Delinquencies and foreclosures keep going up, and tens of thousands
of loans “fixed” voluntarily by industry have already gone bad again. A
survey of mortgage servicers by the California Department of Corporations,
also released today, shows foreclosures continue to outpace modifications
in that state. And a report released last month by a major federal banking
regulator, the Comptroller of the Currency, provides more evidence that the
nation’s lenders are unable to keep up with, let alone get ahead of,
mortgages delinquencies.

As our economy continues to suffer from the home-lending debacle, what
began as a torrential subprime mortgage problem is now seeping into the
prime market as well. We are out of time. As foreclosures keep piling on,
it makes no sense to keep relying on ineffective voluntary efforts when
better solutions are at our fingertips. The market has shown that it cannot
fix itself.

Here’s an updated snapshot of the housing market’s distressing trends,
based on HOPE NOW numbers released today and the most recent Mortgage
Bankers Association’s National Delinquency Survey, released last month:

— Seriously delinquent loans are at a record high for both prime and
subprime loans. The MBA survey shows over 16 percent of subprime loans were
“seriously delinquent,” that is 90-days or more delinquent or in
foreclosure, at the end of March. This is double the 8 percent rate from
one year earlier and the highest on record. Furthermore, though defaults on
subprime loans continue to drive the overall housing crisis, prime loans
are also faltering, with the percent of seriously delinquent prime loans
more than doubling from a year earlier.[1]

— The number of borrowers who lost their homes to foreclosure soared
in May. HOPE NOW estimates that 85,000 families lost their homes to
foreclosure in May, the highest one-month figure since the inception of the
program. This represents a 35 percent increase over three months and more
than double the number from July of last year. The total number of
foreclosures since the program began last July is now estimated at almost
650,000.

— The number of borrowers who received loan modifications is small
compared to the number who lost their home or who are in danger of losing
their home. While HOPE NOW reported 276,000 loans either entered or
completed foreclosure in May, only 70,000 received loan modifications
during the month. That is, almost four times as many families lost their
home or are in the process of losing their home as received loan
modifications from servicers. Furthermore, the data provided by HOPE NOW
understates the number of loans in foreclosure, as it only includes those
homes that entered foreclosure and those that completed foreclosure during
the month, not the total number currently in the foreclosure process. In
fact, 1.1 million families were in foreclosure at the end of March.

— The number of families in danger of losing their homes continues to
be near record highs. According to the data released by HOPE NOW, an
estimated 1,977,,000 loans were 60-days or more delinquent or entered
foreclosure in May, the second highest number since the program began
reporting data last July. This is an astonishing 43 percent increase since
July of last year.[2] This trend is consistent with the new MBA study,
which shows that more than 5 percent of all loans were at least 60-days
delinquent or in foreclosure at the end of the first quarter of 2008,
compared to just over 3 percent a year earlier.[3]

The executive director of HOPE NOW claims “the industry has accelerated
the pace at which it is helping homeowners.” But the numbers show the
problem’s getting worse. And the fact is that little is known about the
effectiveness of the loan modifications or workouts that are being provided
by servicers. HOPE NOW gives no information on the types of modifications
being completed by industry or on the performance of those newly modified
loans. HOPE NOW’s data provides no clue if its members’ efforts are
resulting in long-term, sustainable solutions for homeowners.

Federal and state policymakers must take additional steps. They must 1)
require better reporting from mortgage servicers about loan modifications;
2) expand the ability of FHA to help troubled borrowers; 3) allow
bankruptcy courts to modify mortgages on the primary residences of
financially distressed families; 4) and provide temporary deferment of
foreclosures until housing markets stabilize.

For more information, contact: Kathleen Day at 202-349-1871 or
kathleen.day@responsiblelending.org; Sharon Reuss at 919-313-8527 or
sharon.reuss@responsiblelending.org; or Ginna Green at 510-379-5513 or
ginna.green@responsiblelending.org.

About the Center for Responsible Lending

The Center for Responsible Lending is a nonprofit, nonpartisan research
and policy organization dedicated to protecting homeownership and family
wealth by working to eliminate abusive financial practices. CRL is
affiliated with Self-Help, one of the nation’s largest community
development financial institutions.

[1]From 0. 9 percent at the end of March 2007 to 2.0 percent at then
end of March 2008. National Delinquency Survey, First Quarter 2008, page
10.

[2]According to Bloomberg, foreclosure starts increased by 65 percent
and bank seizures more than doubled in April from a year earlier
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7pd383j2pCo).
(http://news.yahoo.com/s/ap/20080605/ap_on_bi_ge/home_foreclosures).

[3] National Delinquency Survey, First Quarter 2008, page 10.

See Also:

• Westcore Properties Relocates Northern California Office to Sausalito
• Grubb & Ellis Apartment REIT Acquires Creekside Crossing in Lithonia, Ga.
• Aon Risk Services Adds Real Estate Industry Vet Laura Novak, Expands Real Estate Risk Management Services
• Origen Financial Announces Completion of the Sale of Servicing Platform Assets to Green Tree
• Mortgage group reports loan help - Jul. 2, 2008

[Via Real Estate Newswire]