The State Foreclosure Prevention Working Group, a multi-state task force organized last summer by Iowa Attorney General Tom Miller to work with subprime mortgage loan servicers to reduce the number of unnecessary foreclosures by encouraging loan modifications and other sustainable, long-term solutions, has released its first subprime mortgage servicing performance data report.
The report, which summarizes data from a group of the largest mortgage servicers through October, outlined five key findings, as follows:
- Seven out of 10 seriously delinquent borrowers are not on track for any loss mitigation option, with the lack of interaction between mortgage servicers and homeowners remaining a major problem;
- Servicers have increased their use of loan modifications and other home retention options. For those delinquent homeowners in contact with servicers, almost half (45%) are working toward a loan modification, and servicers are increasing their use of longer-term changes to the mortgage loan;
- Payment resets on hybrid adjustable-rate mortgages (ARMs) have not yet been a driving force in foreclosures. A significant percentage of subprime ARMs are delinquent before they experience payment shock from their first adjustment, reflecting weak underwriting or fraud in the origination of the loan;
- Homeowners are helping themselves. Most delinquent loans resolved in October 2007 occurred due to the homeowner catching up on back payments; and
- The refinance option has nearly evaporated.
The group, made up of state attorneys general and state banking regulators, collaborated with industry and federal regulators to develop a uniform data reporting format to collect comparative data to measure the extent of the foreclosure problem and the servicers' efforts to respond to it.
Thirteen of the top 20 servicers provided the requested data for the month of October 2007. These servicers represent approximately 58% of the total subprime servicing market. Reporting companies serviced 5,110,678 subprime and Alt-A loans. Overall, over 150,000 delinquent loans were in the process of receiving a loan modification or other home retention accommodation at the end of October.
To access the October report, go to www.csbs.org/Content/NavigationMenu/Home/StateForeclosurePreventionWorkGroupDataReport.pdf
