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Genworth: Most Foreclosure Prevention Succeeds

Genworth Financial reported that 90% of the almost 10,000 Americans who did not go to foreclosure due to assistance from company loan servicer partners in the last 12 months were able to keep their homes.

Data in the Genworth quarterly "Foreclosure Prevention Scorecard" report, which analyzes workouts conducted from July 1, 2007 through June 30, 2008, provide year-over-year workout information and homeowner assistance trends nationwide based on Genworth's loss mitigation efforts.

The report shows the number of workouts increased especially during the second quarter of 2008 when nearly 3,000 Americans were helped by a Genworth workout, or 32% more cases compared to the second quarter of 2007.

A trend of increasing workouts is expected to continue in the latter part of this year according to company sources.

"Typically the workouts do rise with the delinquencies still rising, "Alan Goldberg, vice president of homeowner assistance at Genworth Financial, told MSN.

"Also, home prices still appear to be dropping, so we see more workouts as time is going over,"

He is optimistic however that the situation will start to change.

"Hopefully as loans become current and delinquency falls, we should see a decline," he said.

"At this point we're giving 100% effort through contacting and getting in touch with every borrower in our portfolio, if the servicer didn't already put them into a workout."

"We try to assist every borrower and cure every loan and if we can't assist them in curing it then we assist them in selling it -- that's our methodology and procedure," said Genworth's vice president of marketing Chris Antonello.

As to whether there is a shift in the types of most favored workouts, "we have seen a movement towards loan modifications."

The reason, Mr. Goldberg said, is primarily because fewer people can afford to pay longer term.

The next two most popular remedies are the Fannie Mae HomeSaver Advance option, which did not exist in the recent past but currently provides "a whole new workout type," as well as a shift towards more short sales where the borrower sells the home before foreclosure, he said.

Before the ongoing depreciation in home prices homeowners were able to sell their homes, "so we're seeing a slight increase in short sales. Nationally there's a rate of about 10% when the borrower is able to get a workout but cannot keep the home."

Fannie Mae HomeSaver Advance, designed to help bring a delinquent loan current, is about two months old so it is still early to predict its long-term success.

"If the workout is assessed properly, it gives the borrower the opportunity to start out fresh since all the past due amount is being paid by Fannie and the borrower is signing a note to borrow that money," Mr. Goldberg explained.

"The servicer is supposed to verify that the borrower can afford the ongoing payment. Otherwise there's no point in bringing the loan current."

"One of the things here is that we're seeing some mortgage insurance providers trying to reach out a little bit more because typically in the past when borrowers thought of mortgage insurance they didn't necessarily think of it as something that benefited them," Mr. Antonello said.

"Here we are in this upside-down mortgage market and we're reaching out as much as we can and we're adding resources, trying to get to these borrowers, working with our servicers and making people aware through reports like this foreclosure prevention scorecard that MIs do provide this service."

In the second quarter, on a quarter-to-quarter basis, Florida saw the largest increase in workouts at 136% more than in the second quarter of 2007.

However, on a year-to-year basis, Texas topped the chart with almost 1,000 workouts in the 12-month period ending in June 2008, keeping the top ranking for the second quarter in a row.

The report shows Texas, Florida and Ohio account for about 25% of all workouts showing that the crisis is deeper in these areas.

The report found the top 10 states where workouts occurred over a 12-month period were Texas, Florida, Ohio, Georgia, Pennsylvania, Illinois, North Carolina, Michigan, New York and Indiana.

Nationwide, 90% of Genworth-assisted workouts were successful workouts that allowed the borrower to save their home and become current on their mortgage, the company said.

Over 60% of the borrowers who were helped had mortgage payments under $1,000, with an average monthly mortgage payment of $978.

"We need immediate solutions to address the growing delinquency and foreclosure crisis in today's housing market," Mr. Goldberg said.

"The good news is that help is available for homeowners in trouble and the trend seems to show that these programs are helping people avoid the worst-case scenario."

More specifically, workout types that appeared to be more popular were repayment plans, which accounted for 45% of all workouts in the second quarter of 2008, followed by loan modifications at 32%, Fannie Mae HomeSaver Advance at 11%, short sales at 10% and deeds-in-lieu of foreclosure only 2%.

Short sales seem to be continuing as home values drop.

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