Foreclosure Prevention Guide

Foreclosures declined 22 percent during September, ForeclosureS.com announced today. The figure was derived from a database of more than 3.5 million listings nationally.

Colorado real estate owned filings tumbled 58 percent, while Ohio was off 29 percent and Michigan was 21 percent lower, the statement said. California foreclosures fell 14 percent, while Florida fell 14 percent and Texas was off by 2 percent.

On a per capita basis, Nevada had the worst rate last month at 12.9 REO filings for every 1,000 households, the announcement said. Next was Michigan, with 12.3 REO filings per 1,000. By county, Costilla County, Colo., ranked worst with 265.5 filings per 1,000. Valencia County, N.M., followed with 81.7 filings for every 1,000.

Pre-foreclosure filings, including notices of default and notices of foreclosure auctions, were 98,298 — tumbling from 117,696 in August, ForeclosureS.com reported. With 34.7 filings per 1,000 households, Nevada also held the worst level pre-foreclosures per capita. By county, Lee County, Fla. was worst at 50.5 filings per 1,000. Next was Pinal County, Ariz., at 46.1 filings per 1,000, followed by Alpine County, Calif., with 45.5 filings per 1,000.

RealtyTrac reported last week that servicers filed 223,538 foreclosures in September, down from 243,947 the prior month. Foreclosure filings, which include default notices, auction sale notices and bank repossessions, occurred on one out of every 557 households in RealtyTrac’s report.

The Mortgage Bankers Association announced a new Foreclosure Prevention Resource Center. The bi-lingual Web site lists major loan servicers and their contact information and guides borrowers on what they need to know when they contact their lender.

The Consumer Credit Counseling Service of Greater Atlanta Inc., which serves consumers nationally, announced research on borrowers it is counseling revealed an average monthly mortgage payment of $1,573 — up 42 percent from the payment reported last year. The service said the best long-term solution for borrowers is a fixed- rate loan.

Providing long-term financing for borrowers in adjustable-rate mortgages was one of the foreclosure prevention measures Texas Attorney General Greg Abbott asked Countrywide Mortgage, Litton Loan Servicing and EMC Mortgage to implement, a news release stated. Abbot also proposed that they first mitigate each case in a non-confrontational setting before sending it to collections; create an in-house resolution committee to address consumer complaints; contact borrowers well before ARMs reset; and waive penalties and late fees on loans at risk while they are worked out.

Abbot requested that within 30 days the three companies report back on the level of ARMs converted to fixed-rates and the number of service fees waived, according to the release.

Under a plan proposed Tuesday by Ohio Gov. Ted Strickland, servicers would be required to report monthly the number of loans, type and percentage of workouts and foreclosures initiated, according to an announcement. The proposal, in response to the Ohio Foreclosure Prevention Task Force’s recommendations issued last month, calls for servicers to increase loan modifications and commit to boosting workout resources, including adjusting staff, and provide advanced notice of intent to proceed with a foreclosure.

The governor’s office will accept comments from servicers through Oct. 22 and will publicly release the final proposed compact on Nov. 8. The compact will remain in effect until foreclosure filings in Ohio decline for four consecutive months or until yearend 2010.

The proposed measures come as a survey of 33 of over 80 mortgage counseling agencies in California showed that the largest lenders are not helping borrowers who cannot afford to pay there mortgages. The California Reinvestment Coalition announced its survey revealed borrowers are pushed to foreclosure in 57 percent of the cases while short sale occurred with 33 percent of the counselors. Only one counselor indicated modifications were common.

The survey reportedly showed lenders are only willing to fix interest rates for one year at a time.

Sovereign Bank announced it is one of participants in the Refinance to Affordable Loan program recently launched by the Pennsylvania Housing Finance Agency for borrowers earning under $120,000 with at least a 620 credit score. The program, which aims to help troubled borrowers in ARMs, interest-only loan, or other exotic mortgages transition into 30-year fixed-rate loans, combines 100 percent financing with flexible credit underwriting. To be eligible, the existing first mortgage must be current at the time of application — though borrowers who have made late payments on their loans as a result of their mortgages adjusting higher over the past year will be considered.

House Democrats and Michigan Gov. Jennifer M. Granholm announced plans for two refinance programs to be administered by the Michigan State Housing Development Authority. One program will help place ARM borrowers into low fixed-rate loans while the other will focus on delinquent borrowers at risk of losing their home. The programs, which require legislative approval, are available only for borrowers whose household income is under $72,250 and whose home purchase price was not more than $216,750.

In a recent speech to the National Bankers Association, the Office of the Comptroller of the Currency’s Chief of Staff John G. Walsh touted community bankers’ foreclosure prevention efforts, including a Midwestern community bank that came up with a loan program, supported by deposits from socially motivated investors, that will refinance subprime ARMs due for reset into traditional mortgages with rates 1 percent to 3 percent lower.