Foreclosure Relief Widens

The U.S. Securities and Exchange Commission released guidance on the effect of the subprime loan modifications, as outlined by the American Securitization Forum last month, on qualified special purpose entity status.

The guidance from the Office of the Chief Accountant indicated that modifications done on adjustable-rate mortgages where default is “reasonably foreseeable” would not invalidate the status as long as nature of the modification is consistent with loans that have defaulted or become delinquent. The modification would have to adhere to ASF’s framework. Registrants are expected to provide sufficient disclosures in SEC filings about the impact ASF’s framework has on qualified special purpose entities.

SEC has requested that the Financial Accounting Standards Board complete its project addressing the guidance.

Countrywide Financial Corp. and ACORN plan to jointly hold a teleconference on Jan. 17 outlining an agreement between the two organizations to expand foreclosure prevention plans beyond those announced last month by the Bush administration, according to an ACORN announcement today.

Countrywide has reportedly agreed to provide relief to subprime borrowers who are currently delinquent and, as a result, excluded in the Bush plan. In addition, for borrowers who became delinquent only after a reset, modifications will be automatic and include capitalization of arrears.

HomEq Servicing has joined a partnership to provide struggling borrowers with alternatives to foreclosure, NeighborWorks America announced today. A Foreclosure Prevention Advertising Campaign was launched by the partnership with the Ad Council that directs delinquent borrowers to a toll-free counseling line before they wind up in foreclosure.

Days before Christmas, Umpqua Bank donated $10,000 to Vallejo Neighborhood Housing Services Inc., of which a portion will be used toward preventing foreclosures, Renee Walton, the California agency’s spokeswoman, told MortgageDaily.com today. The agency provides pre- and post-purchase counseling, as well as downpayment, closing costs and below-market-rate mortgages.

The spokeswoman also pointed out that five of the six loans in the agency’s pipeline are for people buying real estate owned properties.

AARP applauded a “comprehensive” foreclosure prevention solution proposed by New York lawmakers to help the state’s older borrowers who were targeted by subprime lenders, according to an announcement. Borrowers 65 years of age or older have been found to be three times more likely to hold a subprime mortgage than borrowers below 35 years of age.

The Assembly’s proposal will help those in default and in foreclosure with a grant fund, as well as resources for financial counseling. The Assembly also calls for passage of the Responsible Lending Act of 2008 to address predatory lending in New York, AARP announced.

Provest announced five of the top-20 servicers, including some in the top 10, have signed on to use its TRACKER, a foreclosure process tracking system intended to improve turn times while maximizing loss mitigation results.

TRACKER offers the “ability to automatically upload/download field data and images to partners and corporate offices in real-time,” Provest said in the announcement. “Within just a few hours all parties know where and when the papers were served, where the homeowner is physically located and what information was disseminated.”

Fannie Mae announced it is reimbursing its servicing partners when they refer delinquent borrowers to the HOPE Hotline for counseling. The 24-hour, toll-free hotline, 1-888-995-HOPE, supported by the HOPE NOW alliance provides mortgage counseling in multiple languages.

“Early intervention and delinquency counseling are key to helping many at-risk homeowners avoid foreclosure,” said Jason Allnutt, a Fannie vice president. “We believe that in these difficult times, independent counseling agencies can play a unique role by helping servicers help borrowers find more opportunities to avoid foreclosure and keep their homes.”

Fannie highlighted it has helped nearly 100,000 families avoid foreclosure this year by refinancing or working out their loans through its HomeStay initiative.

The Bush administration could possibly expand the efforts of the HOPE Now Alliance to other borrowers besides those in a subprime mortgage, Treasury Secretary Henry Paulson said in an interview Tuesday with CNBC. The alliance, which focuses on identifying and reaching out to borrowers who may not be able to pay their mortgage, is mainly targeting subprime borrowers in 2/27 and 2/28 adjustable-rate mortgages, alliance executive director Faith Schwartz said in the same interview.

Some of those mortgages could qualify for the five-year rate freeze plan for subprime ARMs borrowers who are current on their loan.

“One thing we will consider with HOPE Now Alliance … is maybe expanding beyond subprime borrowers to other borrowers,” Paulson said in the interview.

Currently, the administration is focusing on expanding the availability of financing through the passage of the FHA Modernization Act, which will take care of 250,0000 subprime borrowers, and GSE reform to temporarily raise the loan limits for the government-sponsored enterprises as a means to enable them to securitize jumbo mortgages, Paulson said.