Federal, State, Industry Efforts Are Paying Off

Optimists and pessimists may still have counterarguments about what works and what does not work when it comes to federal, state and industry efforts to ease the mortgage crisis.

Data, however, are slowly siding with those who choose to see the brighter side of this unprecedented endeavor.

Is the Home Affordable Modification Program gaining momentum? The answer, according to Genworth Financial, is yes.

Genworth's quarterly Foreclosure Prevention Scorecard that details mortgage workout results and trends, both nationally and in the top 10 states over a 12-month period, shows combined efforts by the insurer, its lender partners and loan servicers helped keep more than $3.4 billion of mortgages from foreclosure over the one-year period through March 31, 2010.

It is a new high, the mortgage insurer said, bringing the total to over 23,000 loan workouts completed by the end of the fist quarter of this year, a 52% increase from the first quarter of 2009. The average workout loan was $179,748.

Another striking development is the fact that among the top 10 states listed in the 1Q 2010 Foreclosure Prevention Scorecard were three of the four states recognized as the most problematic in the country in the past few years starting with California, which embarked into a loan performance improvement trend by the end of last year, and Florida and Arizona.

California leads the Genworth Foreclosure Prevention Scorecard ranking with $350 million in loans saved from foreclosure, followed by Florida with $342 million, Georgia $185 million, Arizona $182 million, Texas $173 million, Illinois $167 million, New York $152 million, New Jersey $144 million, North Carolina $122 million and Maryland $107 million.

Furthermore, according to Genworth, federal assistance through HAMP is one of the major reasons backing up these data.

A recent survey conducted by Phoenix Management Services, an advisory firm based in Philadelphia, showed greater than 50% of lenders participating in its "Lending Climate in America" survey agree that the U.S. government's Troubled Asset Relief Program "was successful as it allowed the U.S. financial system to avoid "levels of further devastation."

Nonetheless, up to 25% of respondents suggest that the TARP legislation "allowed for too much government intervention and has jeopardized the underlying principals of the free market economy." Another 10% stated the program successfully allowed "many banking institutions" to improve their balance sheets and provide additional liquidity to the marketplace.

Only 6% are not convinced TARP has had a positive effect on the economy as the credit market have not yet shown signs of improvement. The remaining 5% of lenders participating selected the unspecified "other" category when asked to evaluate TARP.

At the same time, according to the survey, participating lenders expressed concern over the recently approved healthcare reform bill, which Phoenix managing director and shareholder Michael Jacoby says indicates their apprehension to the health care program but agreement about the success of TARP.

That doesn't mean, however, that lenders are very optimistic about future rates of delinquencies and foreclosures.

Nearly 50% said they believe mortgage delinquencies will increase and more foreclosure filings will occur in 2010, due to anticipated increases in mortgage rates on ARM loans. Forty-three percent expect only a minimal change in foreclosure rates in 2010 compared to 2009.