The Foreclosure Journal

HOPE NOW today reported that mortgage servicers prevented 170,000 foreclosures during May. Around 100,000 of May’s workouts were repayment plans and 70,000 were loan modifications.

The group, whose members reportedly service 60 percent of subprime loans, estimates second-quarter workouts may reach 519,000 — the highest of any quarter since launching a year ago. A total of 1.7 million foreclosures have been averted since July 2007.

Of 718,000 subprime hybrid adjustable-rate mortgages scheduled to reset between January and May, HOPE NOW said 37,700 had already been modified and 323,000 have been refinanced or paid off. Around 1,800, however, have started the foreclosure process.

Ocwen Financial Corp. announced it has adopted HOPE NOW’s recently announced procedures and guidelines. While the West Palm Beach, Fla.-based servicer said it had already been utilizing the procedures, it “actively supports the idea of an industry standard that assures homeowners are dealt with in a uniform and timely manner.”

Ocwen noted it increased its loss-mitigation staff by 27 percent last year and by 50 percent this year.

Bank of America Corp., which yesterday closed on its acquisition of Countrywide Financial Corp., said the merged mortgage unit will modify or workout about $40 billion in troubled mortgage loans during the next two years. Around 265,000 foreclosures are expected to be prevented. The company also committed to maintaining a loss-mitigation staff of at least 3,900 people for a minimum of one year.

Stewart Default Services has been launched to provide foreclosure services in California, Nevada and Arizona to banks, mortgage and loan servicing companies, credit unions, government agencies, private investors and others, an announcement last week said. Services include loss mitigation, foreclosure processing, title and escrow services, bankruptcy and eviction referral and monitoring, vacant property insurance and post-sale conveyance.

Short Sale Complete announced it helps delinquent borrowers negotiate with lenders to discount the loan balance. The service claims that borrowers it is helping are seeing “as many as 10 offers from prospective buyers.”

Author Douglas Glenn Clark issued a press release indicating his book, A Mortgage Liberator Guidebook: How to pay your bills as interest rates change, helps borrowers prepare to avoid foreclosure. Clark said borrowers must hedge against changing economic conditions and continue monitoring interest rates even after they close on their loans.

The Association of Community Organizations for Reform Now released a statement touting its foreclosure prevention activities over the past decade. In addition to issuing reports predicting an impending housing crisis and lobbying efforts to prevent foreclosures and predatory lending, ACORN said it is responsible for free home counseling initiatives and foreclosure avoidance classes. Along with its sister organization, ACORN Housing Corporation, the group says it has helped prevent 5,400 foreclosures.

California’s senate bill SB 1137 passed the state’s Assembly Monday with a two-thirds majority, ACORN announced. The legislation requires lenders and servicers to talk with delinquent borrowers about restructuring options 30 days before starting the foreclosure process and give tenants in foreclosed properties at least 60 days notice. It also allows fines of up to $1,000 per day for inadequately maintained foreclosed properties.

If signed by California Gov. Arnold Schwarzenegger, ACORN said the bill will become immediately effective, though servicers will have 60 days to implement the requirement to talk with borrowers first.

“We need many tools to help Californians through this housing crisis, and this bipartisan legislation provides one more tool by giving borrowers the critical time needed before a foreclosure begins to work with their lenders and stay in their homes,” Schwarzenegger said today in a statement supporting the legislation.

California’s Department of Corporations today reported there were 9,448 loan modifications during April in the state, rising from 7,209 in March. But modifications dropped to 8,686 in May. Forbearances were 21,359 in May, up from 20,567 in April. The department noted that first-quarter foreclosures were over-reported due to servicer errors.

The Mortgage Bankers Association issued a recent statement applauding the New York legislature’s passage of a bill aimed at addressing the subprime mortgage issue in the state. The legislation requires lenders to send a pre-foreclosure notice to borrowers at least 90 days before foreclosure proceedings may be initiated.

“We are gratified that the leaders opted against mandating a foreclosure moratorium that would have dried up credit markets and harmed the state economy,” MBA Chairman Kieran P. Quinn said in the statement.

The Norfolk Redevelopment and Housing Authority said last week that low- to moderate-income first-time borrowers who used its HomeNet program have had no foreclosures during the seven years that it has provided assistance. The program, which is a partnership with local lending institutions, housing developers, real estate firms, financial counselors and various housing agencies, has linked more than 300 borrowers with counseling, education and mortgage resources.

John Giuffre, who is promoting himself as “Mr. Raghu,” announced he is walking from his home in New York to Washington, D.C., to promote his system — De-LETO: Depreciating, Lease To Own Mortgage — which he claims is “a solution to the U.S. subprime mortgage crisis.” The system reportedly duplicates lease-to-own systems for automobiles that write down a depreciating asset while still maintaining the loan’s original value.