Mortgage rescues up in April
Bank repossessions also increased as foreclosures continued to plague the market.
NEW YORK (CNNMoney.com) -- Nearly 270,000 troubled homeowners were issued mortgage workouts in April, according to a industry report released Wednesday. That was up from about 250,000 in March.
Hope Now, the coalition of mortgage lenders, investors, servicers and community groups put together by the Bush administration to fight the foreclosure plague, claimed that its members and other mortgage lenders granted 127,000 mortgage modifications during the month, plus an additional 142,831 repayment plans.
Hope Now regards the number of modifications done, which was slightly less than the 133,910 accomplished in March, as a statistical blip due to changes in the way workouts made under President Obama's Home Affordable Modification Program (HAMP) are recorded.
Under HAMP, borrowers are issued trial modifications that become permanent after three months of on-time payments. Until that time, the workouts are considered repayment plans, according to Hope Now's chief statistician, Michael Bright. The same accounting issue resulted in the number of repayment plans soaring 24% from 114,934 in March.
"Assuming borrowers complete the trial period successfully as mandated by the government, these loans will eventually be recorded as having been modified," said Bright.
Lenders should be utilizing the HAMP program more and more in the future. They regard it as useful tool. "Many Hope Now members see HAMP as an important opportunity for homeowners in trouble," said Faith Schwartz, Hope Now's executive director. "The number of homeowners helped by the industry each month should continue to increase as this program continues to be implemented."
Despite the increase in workouts, the foreclosure problem seemed as knotty as ever. During the month, Hope Now reported 64,751 sales of foreclosed homes. That was a rise of 22% from March.
March's figures were probably suppressed somewhat due to earlier moratoriums on foreclosure filings observed by various lenders, including mortgage giants Fannie Mae and Freddie Mac.
These moratoriums may have saved some borrowers from foreclosure as they benefited from the new programs, but in other cases, the moratoriums just delayed the inevitable. Future statistics on home repossessions may be higher as a result.
John Taylor, the head of the National Community Reinvestment Coalition, thinks that May data should better reveal whether HAMP is working as intended. "We should see around 50,000 foreclosure sales in May," he said. "Then we'll know we're heading in the right direction.