Hope Now Reports Record Loan Modifications in October

by admin ~ December 12th, 2008.

HOPE NOW, the private sector alliance of mortgage servicers, counselors, and investors announced last week that they had set a record in October for the number of foreclosures averted.  The home preservation alliance company said that its mortgage industry members had prevented 225,000 home foreclosures during that month, 13,000 more than the record set in September.

HOPE NOW was established in October, 2007 following prompting from the Department of the Treasury.  The alliance is an attempt to streamline and consolidate loan work-out and mitigation procedures used by individual servicing companies.  The confederation claims that it has assisted approximately 1.7 million homeowners in the first 10 months of this year and anticipates that the total by the end of the year will be 2.2 million, 45 % more than in 2007 (including foreclosure prevention activities taken by the industry before the organization of HOPE NOW.)

In October mortgage servicers completed 225,000 mortgage loan modifications. 103,000 of these were modifications of existing mortgages and 122,000 involved new payment plans.  During the last 3 months the use of loan work-outs has increased by 24% and payment plans by 9%.  This increasing reliance on home loan modifications is anticipated to continue as economic conditions warrant.

According to Faith Schwartz, HOPE NOW’s executive director, the growing list of loan modifications is not accidental.  She stated that, “The U.S. economy is still troubled and that means that changing the terms of a loan is an increasingly appropriate way to keep more homeowners in their homes.  HOPE NOW members are likely to continue to consider them as long as the broader economy continues to struggle.”  Holders of “A-paper” mortgage loans are less likely to receive mortgage restructuring than subprime borrowers. 31% of the prime mortgage holders who received workout assistance were given a loan modification compared to 57 % of subprime homeowners.

HOPE NOW data shows that the number of foreclosures leveled off in October.  Homes went into foreclosure at approximately the same rate in October as in September and this was below the number of foreclosure starts recorded in April through August.  Home loans in the 60-plus days delinquent category now represent 4.3% of all outstanding mortgages with prime home loans increasing at the most rapid pace. For the fifth month in a row the number of foreclosure starts for prime loans exceeded those for subprime loans.

HOPE NOW has sent out nearly two million letters to homeowners in possible danger of losing their homes and this resulted in a 17% response rate.  The number of homeowners who have contacted their servicers after receiving the letters is six times the 2-to-3% response rate recorded when loan servicers send out their own mailings. The HOPE Hotline (1-888-995-HOPE) receives an average of more than 6,000 calls a day.

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2 Responses to “Hope Now Reports Record Loan Modifications in October”


    I don’t own a home, so I guess I’m lucky, but some of my kids do and are generally in trouble. I just saw Ms. Schwartz on Bloomberg TV and I commend you for your great work. OTOH I continue to be surprised that the lenders are not willing to go even farther – the alternative is foreclosure, with commonly a very large loss of money when the property is sold for far below its former value and often after a long delay. I have heard on the news that the sale of bundled, securitized mortgages creates a fragmentation of ownership of each mortgage which leaves nobody with authority to change the terms. In the early days of the TARP money, I hoped that if the government bought those securitized loans they would become the single owner which has been absent, and facilitate renegotiation of loans. That does not seem to be happening. Indeed, I realized from the beginning that it might be far too simplistic to assume that the government could reassemble all the broken parts of any single mortgage. OTOH, if the borrower cannot pay, everybody knows that the lender can foreclose, and then the original contract has nothing to do with the house; then the loan servicing party would be free to sell the house for whatever it would bring, and the new loan would have nothing to do with the old one.

    Oddly enough, right after Ms. Schwartz was on Bloomberg, a man named ALTAIR M. GOBO, a financial planner, was on Fox News saying that he agrees that lenders are more incined to give help to people who are failing to pay, but it seems they would do well to give relief to people who are only almost in trouble – hoping to avoid foreclosure.

  2. My Loan Mod Story Says:

    Thanks for this – I’ve been struggling to get prepared with my loan modification process and trying to get a good understanding of everything I need to have in order. It’s been stressful but I’ve found some great resources like this and am grateful.

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