By Alan White
The HOPE NOW alliance has released a 35-page report with a wealth of useful data from mortgage servicers about foreclosures started, sales completed, workouts and loan modifications during 2007. The data are based on a survey covering about 60% of outstanding mortgages (prime and subprime.) Some highlights: although the press release says that only one-third of foreclosures started led to a completed foreclosure sale, this is a bit misleading. The foreclosure starts increased dramatically from the first quarter of 2007 to the 4th quarter. If you compare foreclosures started in the first quarter to sales completed in the third quarter, about half of foreclosures started resulted in a foreclosure sale (assuming a six-month time lag.) Nevertheless, the total of completed sales for the year, estimated at 509,000, is far less than the foreclosure filings total, 1,504,000. In contrast, 336,000 loan modifications were concluded.
Completed sales are obviously the worst outcome (for homeowner and investor.) The other possible outcomes can range from lingering in default or bankruptcy for months or years to reinstatement by payment to a successful sale or refinancing. Some outcomes are clearly successes, while others, like repayment plans (over 1.1 million concluded in 2007) are ambiguous. On the loan modification front, the good news is that while foreclosure starts and sales went up roughly 50% from the first to the fourth quarter, loan mods tripled. For subprime loans, modifications went from 29,000 in the first quarter to 104,000 in the fourth quarter. While servicers are still offering repayment plans much more frequently than loan modifications, the ratio went from 1:6 in Q1 to 1:3 in Q4.
The report also provides state-by-state data. There are stark contrasts between the "bubble" states like California and Florida, and the "weak growth" states like Michigan and Ohio. Loan modifications have increased much more rapidly in the bubble states, perhaps because there is more homeowner income to work with. After I have digested this report a bit more I may post some additional highlights.
Its presentation differ from other posts...
Regards,
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