Proprietary Loan Modifications Hold Steady at 56,000

Proprietary loan modifications for August remained at a relatively flat pace from July with about 56,000, according to data from the Hope Now alliance.

For the year, approximately 690,000 permanent loan modifications have taken place for homeowners, in which 478,000 are proprietary and more than 211,000 have been completed under HAMP, the alliance said.

Since the Washington-based private sector alliance of mortgage servicers, investors, mortgage insurers and nonprofit counselors began compiling this data in 2007, the mortgage industry has completed 4.86 million loan modifications for homeowners. From this data, more than four million proprietary modifications have been completed through July 2011.

“Hope Now's servicing partners continue to complete permanent loan modifications at a rate consistent with past months—in spite of tremendous negative impact of the continued housing and unemployment crisis,” said Faith Schwartz, executive director of Hope Now. “And, in cases where modifications are not possible, the industry is working hard to educate at-risk homeowners about the options available to them.”

According to Hope Now, data on proprietary loan modifications have characteristics consistent with loans that support greater affordability and sustainability with most of the modifications having lower principal and interest payments and fixed interest rates of more than five years.

Approximately 46,000 of all proprietary modifications had reduced principal and interest payments, in which 68% of this total had their payments lowered by 10% or more. Meanwhile, 47,000 of the proprietary modifications had fixed-rate interests that were more than five years.

There were 2.8 million loan delinquencies that were 60 days or more past payment in August, which was relatively the same amount from the previous month.

However, foreclosure sales and starts experienced month-over-month increases. Foreclosure sales were up 5% from 65,000 to 68,000, while foreclosure starts were 18% higher from 185,000 to 218,000.

“We understand that unemployment, medical hardships and other financial issues have deeply affected the nation's homeowners resulting in people falling behind on their mortgage payments,” Schwartz said. “But it is important to continue to convey the message that mortgage servicers are working tirelessly with their customers through localized outreach events for homeowners to get one-on-one mortgage assistance. The industry, and its non-profit and government partners, remains committed to using all of the tools available to assist families, whether they are home retention solutions, short-term alternatives or other alternatives to foreclosure.”