FHFA: Foreclosure Prevention Actions=2.3M, Foreclosure Starts Up

Posted on by shanetorres

Fannie Mae and Freddie Mac completed nearly 2.3 million foreclosure prevention actions by from the start of their conservatorship to the end of March 2012, according to FHFA’s Foreclosure Prevention Report for first-quarter 2012.

The report, released Friday, showed that over 1.9 million of the foreclosure prevention actions undertaken by the GSEs-including 1.1 million permanent loan modifications-have helped borrowers keep their homes.

Moreover, half of borrowers who received loan modifications in Q1 2012 had their monthly payments reduced by more than 30 percent, with one third of those including principal forbearance. Performance of modified loans is also strong, with less than 15 percent of loans modified in Q2 2011 missing two or more payments.

In other modification news, both Enterprises found that loans modified through HAMP performed better after modification than non-HAMP modified loans. Nine months after modification, the rate of 60-plus day delinquent loans modified through HAMP was up to 15 percentage points lower than the same rate for non-HAMP modifications.

FHFA also reported that mortgage performance continued to improve in the first quarter of 2012 as early stage (between 30-89 days) and serious delinquency rates declined. The percentage of loans 30-59 days delinquent fell from 2.11 in Q4 2011 to 1.72 percent in Q1 2012, while loans 60-plus days delinquent fell from 4.46 percent to 4.15 percent. The percentage of seriously delinquent (90-plus days) loans dropped from 3.78 percent to 3.61 percent.

Foreclosure starts in 2012’s first quarter increased for the first time since Q3 2010, moving up to 226,000 from 218,000 in the previous quarter. Third-party and foreclosure sales fell slightly between quarters from 80,000 to approximately 79,000.

REO inventory declined from 72,014 to 71,505 as property dispositions increased (77,104 from 75,163) and acquisitions decreased (173,464 from 179,063) in the first quarter.

According to the report, more than half of seriously delinquent borrowers had missed more than a year of mortgage payments. The number of loans 365-plus days delinquent in Florida actually exceeded the total of every other state except California. The top five states ranked by percentage of the Enterprises’ single-family mortgages more than one year delinquent are Florida, New Jersey, Georgia, New York, and Maine.

Update on Department of Justice Global Settlement

Posted on by shanetorres

The U.S. Department of Justice (DOJ) and the state attorneys general have agreed to the terms of a global settlement with the largest mortgage servicers, including Bank of America. This government agreement enhances our ongoing commitment to help homeowners who are struggling to make their mortgage payments by extending additional options.

Under the agreement, Bank of America:

  • Is implementing a new modification program that offers principal reduction to qualified customers.
  • Will work to lower interest rates to provide reduced payments for eligible homeowners who are current on their payments but owe more than the current value of their homes (mortgage must be owned by the bank).
  • Will continue to help customers who are pursuing short sales and may offer additional assistance programs, such as deed in lieu of foreclosure and/or financial assistance to help those who are transitioning out of their properties.

How this may affect short sale agents:

Some customers who are currently in the short sale process may qualify for this program. Customers who are pursuing a short sale can continue with the process while in review for the DOJ principal reduction program. If a short sale customer is approved for the DOJ principal reduction modification, they will then have to decide which option is best for them, either continuing with the short sale or accepting the modification.

If the customer chooses to accept the modification, then they are electing to discontinue their short sale. It is important for the customer to consider all options and determine which one is best for them based on their individual needs.

Furthermore, the borrower needs to understand that there could be legal implications to cancelling the short sale if they have already entered into a contract with a prospective buyer in the short sale process. The borrower should consult with you and an attorney before making this important decision. There is no guarantee that a customer will be approved for either a short sale or the DOJ principal reduction program. 

Short Sale/Deed in Lieu

  • Homeowner can move into more affordable housing.
  • If the homeowner has already signed a short sale contract, they should discuss their legal and financial obligations with their trusted advisors, such as a legal counsel or real estate agent. 
  •  If the homeowner cancels the short sale or deed in lieu, they will not be eligible for relocation assistance.

DOJ Principal Reduction

  • Homeowner may be able to stay in their property at a lower monthly payment.
  • If approved, homeowner will improve their equity position.
  • If declined, homeowner can reapply at a future date or continue to pursue a short sale; however, foreclosure activities may resume. NOTE: Foreclosure activities may continue based on state and investor guidelines.

At Bank of America, we are committed to making government and proprietary home loan assistance solutions available as quickly as possible. We are offering qualified customers these enhanced loan assistance solutions, including the new mortgage modification program that will include principal reduction.

Please visit the Agent Resource Center for education and updates on short sale programs

Short sale Update!

Posted on by shanetorres

Based on the Department of Justice settlement, effective June 1, Bank of America is extending additional support to homeowners in agreeing to enhanced 2nd lien deficiency waiver guidelines.

Once you have determined if your homeowner may qualify for this waiver, contact your short sale specialist for establishing the amount to request for the 2nd lien.

Basic qualifications:

  • Short sales initiated on or after June 1, 2012
  •  The 2nd lien must be attached to a 1st lien mortgage owned by Bank of America, Ally Bank, Chase, Citibank or Wells Fargo

Important Reminders:

  • Agents should use Equator messaging as the primary way to communicate with their short sale specialist.
  • For status updates and immediate questions, agents should continue to contact Short Sale Customer Care at 1.866.880.1232; Monday – Friday 8:00 am – 10:00 pm Eastern and Saturday 9:00 am to 5:30 pm Eastern.

Home Affordable Foreclosure Alternatives (HAFA) Short Sale Update

Posted on by shanetorres

HAFA Supplemental Directive 12-02, effective June 1, 2012, impacts short sales with loans from non-government-sponsored enterprises in which the homeowner is eligible for the HAFA program.

Key enhancements include:

  • Time frame extended: The program has been extended to Dec. 31, 2013. The HAFA short sale or deed in lieu of foreclosure can be initiated up to Dec. 31, 2013; however, the transaction must have a closing date on or before Sept. 30, 2014.
  • Eligibility updated: Occupancy requirements for HAFA eligibility have been removed; however, the property can’t be owned or secured by a business entity.
  • The second lien maximum has been increased from $6,000 to $8,500. 
  • HAFA relocation assistance of $3,000 will be paid only to the primary resident (borrower or occupant) of the property at time the agreement is executed. The resident must vacate upon closing. Vacant properties are not eligible for HAFA relocation assistance.
    • Nonborrowers (tenant, legal dependent, parent or grandparent) can now qualify if occupying the property and must vacate upon closing.

Additional information: 

  •  This policy is effective June 1, 2012, for new HAFA-eligible short sales initiated. It also applies to current HAFA short sales prior to closing.
  • Tenants will be eligible only for the $3,000. Any money available from additional incentive payout opportunities must be paid to the borrower. The HUD-1 must reflect the breakdown.
  • The borrower will be responsible for requesting and managing the tenant relocation assistance, including submitting required proof of occupancy and other documentation.

Additional recommendations:

  • Help your financially distressed clients understand the benefits a HAFA short sale, including the relocation incentive. Review the agent HAFA education guide to learn more.
  • Provide the Bank of America non-GSE HAFA Eligibility FAQ to interested homeowners.
  • Direct homeowners to contact Customer Care at 1.866.880.1232 if they have questions.

May Busy with Foreclosure Activity After Slowdown: RealtyTrac

Posted on by shanetorres

After seeing months of consistent decreases, May turned out to be a busy month for foreclosure activity.

Foreclosure filings, which include default notices, scheduled auctions, and bank repossessions, were up 9 percent in May from the previous month of April, but still down 4 percent from a year ago, according to RealtyTrac’s U.S. Foreclosure Market Report for May 2012.

Foreclosure filings were reported on 205,990 properties in May after two consecutive months below 200,000, but activity levels were still down on a yearly basis for 20 consecutive months now. In April, foreclosure filings totaled 188,780.

Brandon Moore, CEO of RealtyTrac, said the increase in activity shows the ride to the bottom of the foreclosure cycle will be “bumpy.”
The report also revealed that one out of every 639 homes had a foreclosure filing during the month.

After three straight monthly decreases to a 49-month low in April, bank repossessions (REOs) climbed 7 percent month-over-month, but were still down 18 percent from May 2011. In May, lenders completed the foreclosure process on 54,844 properties.

Foreclosure starts – default notices or scheduled foreclosure auctions, depending on the state – were filed on 109,051 properties in May, a 12 percent monthly increase and a 16 percent jump from a year ago. The annual increase was a first after 27 consecutive months of yearly declines.

“Based on the rise in pre-foreclosure sales we’ve seen so far this year, a higher percentage of these new foreclosure starts will likely end up as short sales or auction sales to third parties rather than bank repossessions going forward,” said Moore. “While pre-foreclosure sales have less of a negative impact on home values than bank-owned sales, they still represent a discounted sale where a distressed homeowner is losing his or her home.”

Moore added that more banks are treating delinquent mortgages with short sales rather than bank repossessions to help minimize losses and also avoid taking on more REOs, which have to then be managed, maintained and marketed for sale.

On a state-by-state basis, foreclosure starts increased over a one-year period in 33 out of 50 states – 17 of the states have a judicial process and 16 states a non-judicial process.

Judicial states with the highest increases in foreclosure starts included New Jersey (118 percent), Pennsylvania (97 percent), Florida (83 percent), Massachusetts (60 percent), New York (59 percent), South Carolina (43 percent), Ohio (32 percent) and Illinois (28 percent).
Non-judicial states that posted the highest increases in foreclosure starts were Tennessee (165 percent), Texas (51 percent), Missouri (35 percent), Georgia (30 percent), and Michigan (24 percent).

Foreclosure activity in Georgia spiked 33 percent from the previous month and 30 percent from a year ago, giving the state the highest foreclosure rate out of all states.
In the previous month, Georgia actually had a lower foreclosure rate than Arizona, Florida, California and Nevada.

Arizona foreclosure activity rose by 24 percent in May month-over-month, giving the state the number two spot for its foreclosure rate. Foreclosure activity for the state, however, was down 29 percent from a year ago.

Even though Nevada saw a 66 percent yearly drop in foreclosure activity, the state still came in third for its foreclosure rate.

California decreased its foreclosure activity by 19 percent on a yearly basis, but still managed to have the fourth highest foreclosure rate.
Illinois, on the other hand, had a 54 percent yearly increase in foreclosure activity; the state had the fifth highest foreclosure rate.

Other states with foreclosure rates in the top 10 category were Ohio, Michigan, South Carolina, and Utah.

Among the metro areas, Riverside-San Bernardino in California came in first for the highest foreclosure rate among the 20 largest metropolitan statistical areas by population. One in every 179 housing units in the Riverside-San Bernardino metro had a foreclosure filing in May, which is more than 3.5 times the national average.
Atlanta came in second for its foreclosure rate, Phoenix third, Chicago fourth, and Tampa came in at fifth.

RealtyTrac is an online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data.