Loan Mods Decline

Hope Now servicers helped nearly 170,000 at-risk borrowers stay in their homes in May, but they could not keep up with the record pace of workouts in April when they negotiated 185,000 loan modifications and repayment plans.

Despite this letup, Hope Now executive director Faith Schwartz says the pace of workouts is accelerating and the second-quarter tally will exceed first-quarter workouts.

"The second-quarter results are going to blow away the first quarter," said Hope Now advisor Stan Collender.

The May data show that the servicers completed 67,300 loan modifications for prime and subprime borrowers in May, compared to 77,400 in April.

Hope Now also reported that 83,000 families lost their homes in foreclosures in May.

The Center for Responsible Lending claims that the Hope Now initiative is failing to keep up with the accelerating foreclosure crisis.

"Delinquencies and foreclosures keep going up and tens of thousands of loans 'fixed' voluntarily by the industry have already gone bad," said CRL executive director Debbie Goldstein.

Treasury Department officials mobilized the Hope Now initiative last fall to deal with rising foreclosures.

Since then, Hope Now servicers have been fine-tuning their workout efforts and they recently agreed to establish timetables for acting on a borrower's request for assistance and to keep them informed and up to date about the process.

The 28 servicers also agreed on guidelines for dealing with second mortgages and expediting short sales.

Getting the second-lien holders to agree to a loan modification on the first mortgage is often difficult and time consuming.

Hope Now officials expect the new guidelines on second liens will accelerate the pace of workouts going forward.

The Office of the Comptroller of the Currency recently questioned the accuracy of the monthly data that Hope Now discloses about member workout efforts.

And Hope Now has agreed to work with OCC and the Office of Thrift Supervision to improve and standardize the reporting of loan-level data on credit performance, loss mitigation efforts and results.

"I am pleased the OCC is working with Hope Now and OTS to move mortgage reporting towards a more common set of metrics and definitions," comptroller John Dugan said.

Hope Now relies on surveys of its members and the executive director insists the information it is receiving is reliable. "More important, our reports are an accurate picture of activity taking place in the broader marketplace to provide alternatives to foreclosure," Ms. Schwartz said. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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