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Foreclosure Prevention is Widespread

Recent foreclosure activity

July 28, 2008


The increase in foreclosure is matched only by the increase in foreclosure prevention activity. The efforts are being take by public and private organizations inside and outside the mortgage industry at both the state and federal level.

Foreclosure.com and LoanResolve.com jointly announced they have forged an alliance to reduce and simplify the short-sale process. The two companies hope to use their relationships with "most if not all of the major lenders" to prevent loans from reaching foreclosure.

Bid4Assets recently announced the launch of Bid4Homessm, a three-phase program for unloading real estate owned properties. The first phase is an online auction, which includes a preview due diligence period and exposure to more than 3 million prospective buyers. The second phase combines the online listing with the use of the lender's real estate agent. A third phase takes the property back to the online auction at terms that are more appealing to bidders.

"Since January 2008, 21 percent of listings in its auctions sold within 30 days, and 58 percent brought more than the asking price," Bid4Assets said.

The Federal Foreclosure Assistance Center said Friday that it has introduced a free program that enables delinquent borrowers to obtain a mitigation package that details available foreclosure prevention options within 72 hours of completing an online questionnaire. The program is based on a private-public alliance model that enables local governments to immediately offer temporary aid to their residence without capital expenditures.

The assistance center alluded to the $4 billion in community development grants that is part of federal legislation approved by Congress on Saturday and noted that borrowers who are not in areas where a private-public alliance has been established would receive a refund for fees they pay if an alliance is subsequently established.

David G. Kittle, chairman-elect of the Mortgage Bankers Association, testified before the House Financial Services Committee on Friday at a hearing entitled A Review of Mortgage Servicing Practices and Foreclosure Mitigation, the Washington, D.C.-based trade group announced. He explained it is in everyone's best interest to prevent foreclosures -- which cost an estimated $50,000 each and can wind up forcing lenders to write down as much as 60 percent of a loan's balance.

Kittle indicated servicers have taken a number of steps to reduce foreclosures including increasing staff, investing in new technology and sponsoring home retention workshops. In addition, servicers are relying on third parties to contact borrowers about workouts and funding borrower outreach ads.

HOPE NOW servicer members have committed to respond within five days of requests from borrowers for a loan workout, the group's Executive Director Faith Schwartz said in her own testimony at the same hearing, a news release said. In addition, servicers will update borrowers every 30 days on the status of their request and provide an approval or denial within 45 days.

Schwartz, who noted 1.7 million foreclosures were prevented from July 2007 through May 2008, also said second-lien holders should subordinate their position as long as the modification does not worsen their standing.

Radian Guaranty is among HOPE NOW's newest members. Cam Melchiorre, an executive for the mortgage insurer, now serves as co-chair of the alliance's technology committee.

HOPE NOW said it recently held two Home Preservation Workshops in Newark, N.J., in partnership with state politicians and NeighborWorks America. The free sessions included one-on-one sessions, both in English and Spanish, with delinquent borrowers.

Joe Gross, host of Your Home - Your Future, a mortgage talk show broadcast by New Jersey's 1160 AM, has made a recording of a recent interview with New York State Assemblyman Darryl Towns available by telephone at 212.461.2780, a statement Friday said. The interview details a recently enacted New York state bill that deals with foreclosure prevention.

Gross noted that 50,000 foreclosures are projected in the Empire State this year.

In Washington, D.C., Neighborhood Assistance Corporation of America said it recently held a demonstration to show at-risk borrowers how to avoid foreclosure and press legislators and the Bush administration to take more action. The group expected 5,000 demonstrators.

The group also hosted 300 counselors, certified by the Department of Housing and Urban Development, at the Capital Hilton Hotel to provide same-day restructurings and loan modifications.

In California, 121,341 second-quarter notices-of-default were filed, DataQuick Information Systems reported. Filings rose from 113,809 in the first quarter to "the highest in DataQuick's statistics, which go back to 1992." A year earlier, filings totaled 53,943.

The number of Trustees Deeds -- where the foreclosure process was completed -- reached 63,061 during the second quarter, DataQuick said. Trustees Deeds jumped 34 percent from the prior quarter, soared 261 percent from 12 months earlier and were "the highest since DataQuick began tracking Trustees Deeds in 1988."

Ticor Title Company of California has become a customer of DepotPoint Inc., a recent press release said. Ticor will use REO TrackPoint online workflow applications to streamline the tracking and management of thousands of properties in all stages of distress

Carey Sutton, the chief executive officer of Asante Real Estate Group Inc., issued an announcement Thursday expressing frustration over his firm's inability to extract principal writedowns from American Home Mortgage Servicing Corp. on two California properties -- one valued at $3.9 million. After being rejected on short-sale offers by the servicer, Sutton said the borrowers sought help from and were rebuffed by the office of U.S. Sen. Dianne Feinstein.

Sutton did not respond to a request for a statement about whether his firm was waiving their fees in the two transactions.

Consumer Credit Counseling Service of Greater Atlanta reported the mortgage crisis has pushed its housing counseling traffic up 184 percent during the first half of this year compared with a the first half of 2007. About three-quarters of the traffic was for foreclosure avoidance.

North Carolina House Bill 2623, Emergency Foreclosure Reduction Program, was ratified by state lawmakers on July 17 and sent to the governor. The legislation would empower the state's commissioner of banks to extend the foreclosure process by 30 days on owner-occupied subprime loans deemed to have a reasonable chance of being worked out.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: [email protected]

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