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Private Loan Modifications Decline in February

by Houston Agent

Fewer and fewer homeowners have been able to capitalize on the benefits of home loan modifications, both public and private.

Loan modifications from the nation’s banks were down 20 percent from January to February, according to an analysis by the Hope Now alliance.

In total, 44,500 home loans were modified in February, compared to 55,700 in January, and workouts also declined by 28 percent.

In a HousingWire article that reported the statistics, Faith Schwartz, a Hope Now executive director, said February’s declines do not necessarily indicate a new era for modifications.

“There are many moving parts in the foreclosure prevention process and we anticipate that one month will not define any significant trends,” Schwartz said. “However, one of our key data points showed that we saw a decline in the total number of serious delinquencies — loans that are 60 or more days past due — for February.”

Foreclosure sales and delinquencies also declined somewhat in February, most likely a result of banks adjusting to the new requirements of the $26 billion mortgage settlement. For the month, sales fell from 79,000 to 69,000, a 12.6 percent decline, and servicers started 167,000 foreclosures, a 16 percent decrease. Meanwhile, serious delinquencies decreased from 2.77 million to 2.66 million, from January to February.

Declines seem to be the norm, actually, especially when government loan modification efforts are factored in. Based on the latest government data, which runs through January 2012, modifications have been on a sustained decline since January 2011. Though modifications have still been in positive territory for the time period, the quantity of modifications has decreased with each month.

As we recently reported, though, one has to wonder if the increasingly lackluster performance of loan modification programs is because of the programs themselves or the demographics they are targeted to help.

After all, the FreeScore.com survey in the referenced article did find that 72.76 percent of respondents had never heard of both the Home Affordability Modification Program (HAMP) and the Home Affordable Refinance Program (HARP), government-led initiatives aimed to help distressed borrowers, and only 5.26 percent of respondents had heard of HAMP, 8.98 percent had heard of HARP, and 13.31 percent had heard of both programs.

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