Report: Mortgage modifications decline with drop in delinquencies
The number of mortgage modifications made by banks took a dive during the first half of the year, falling 42% when compared with the prior year, an industry group reported Wednesday.
There were approximately 558,000 loan modifications during the first six months of the year, a 42% drop from 968,000 during the first six months of 2010, according to Hope Now, a private-sector group of mortgage servicers, investors, insurers and nonprofit counselors.
The group also said that delinquencies are down: The number of loans not paid for 60 days or more was 2.7 million for the first six months of 2011, a 27% decline from 3.7 million for the first half of 2010.
"We have 1 million [fewer] borrowers past due on their mortgages," Faith Schwartz, Hope Now's executive director, told The Times. "So the trend on delinquencies is much better."
She said borrowers are also probably turning to options other than foreclosure, such as short sales, in which banks permit borrowers to sell their homes for less than they owe.
The vast majority of modifications made to mortgages were done outside the Obama administration's main foreclosure-relief program, the Home Affordable Modification Program, the group said. Loan modifications completed under that program were down 45% from the prior year, to 183,421. So-called proprietary modifications, those not made through the administration's program, dropped 41%, to 375,000.
-- Alejandro Lazo
Photo: Borrowers hoping to get a loan modification gather outside the Los Angeles Convention Center last year at an event put on by the Neighborhood Assistance Corporation of America. Credit: Irfan Khan / Los Angeles Times