By Kevin Chiu
Mortgage servicers have modified nearly 3.7-million home mortgages since the housing crisis started in 2007, according to a private group of mortgage servicers, investors, mortgage insurers and non-profit counselors. The organization, Hope Now estimates the industry completed almost 150,000 permanent loan modifications during August, the last month for which figures are available.
A massive 91% of all proprietary loan modifications for the month included reductions in principal owed against properties and interest payments as bankers slash the amount owed on mortgages in order to make loans more affordable to keep families in their homes.
It’s the first time that bankers and mortgage servicing companies have been recognized for making more aggressive reductions in mortgage principal on a wide scale to reduce the number of home foreclosures, which are at record levels. More than 4.5-million U.S. homes have been foreclosed since the crisis started over five years ago.
According to the group, private mortgage servicers and those in the Obama administered program, HAMP have completed 1.3-million loan modifications so far this year. The organization has also seen a decline in the number of mortgages going into default for longer than 60 days.
“Homeowners and loan servicers are using all available avenues for preventing foreclosures, including utilizing a combination of forbearance, HAMP modifications, proprietary modifications and even short sales and deed in lieu efforts,” said Hope Now senior advisor Faith Schwartz. Banks have ordered moratoriums on foreclosures in 23 states in order to investigate the number of mortgage foreclosures that may have been filed without following proper legal protocols.
Mortgage servicers are the first responders to “foreclosure prevention, loss mitigation and resolution and they are taking the lead in reviewing, resolving and repairing an industry in crisis,” said Schwartz. “Despite significant strides in foreclosure prevention efforts, it is clear that long term job creation will be an important driver for recovery and sustainable home ownership.”
Hope Now offers support to distressed homeowners through face to face meetings with counselors nationwide. Homeowners at risk of losing their homes or having trouble making mortgage payments may call 888-995-HOPE™ to talk with a non-profit housing counselor in their area.