Why are non-foreclosure solutions outpacing foreclosures?
Loss mitigation is a process through which mortgage lenders work with homeowners delinquent on their mortgage payments. Through loss mitigation, a lender can modify the terms of a home loan, allowing the homeowner to sell the property for less than is owed, or transfer the deed back to the lender. Though designed to reduce potential loss incurred by lenders, the process also helps borrowers to remain in their homes and avoid foreclosure.
According to HOPE NOW, a private-sector coalition of servicers, investors, mortgage insurers, and non-profit counselors, during February 2016 non-foreclosure solutions outstripped foreclosures by a ratio of 3:1. During that time, there were approximately 97,000 non-foreclosure solutions, compared to about 28,000 foreclosure sales. Several possible non-foreclosure solutions included in these statistics, such as:
- Loan modifications
- Short sales
- Deeds-in-lieu of foreclosure
Of the non-foreclosure solutions recorded, 27,000 were permanent loan modifications, approximately 19,000 completed through proprietary programs and about 8,000 completed through the government's Home Affordable Modification Program (HAMP).
Executive director of HOPE NOW, Eric Selk, reports that there "...has been a fairly steady trend for the past year and illustrates [sic] the availability of various long-term and short-term solutions that benefit homeowners. From a historical perspective, this number marks consistent performance in customer assistance and solutions offered.”
In spite of the fact that much of the population has returned to pre-Great Recession status, there are still places in the U.S. with far too many distressed homes. HOPE NOW has three more outreach events scheduled for later in the year to bring homeowners facing foreclosure into direct contact with their servicers and housing counselors. It is clear from the high volume of non-foreclosure solutions that banks and other servicers are continuing to work with borrowers who are still struggling to make their mortgage payments. According to Selk, such solutions have remained at a consistent level in spite of the fact that mortgage delinquencies have fallen to their lowest point since HOPE NOW has been keeping track of them.
If you are still struggling financially as a result of the Great Recession, or if you have other real estate issues that need attention, please consult with our excellent real estate attorneys at Ianniello Anderson. We serve clients in the Albany, Clifton Park, Glens Falls, Saratoga Springs, Troy, and the entire Northeastern NY areas at (518) 350.7755.