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The State of Foreclosures

Foreclosure prevention programs

December 27, 2007


Mortgage loan servicers have partnered up with local governments and charitable organizations to help delinquent borrowers avoid foreclosure. Among potential solutions are loan modifications and short sales.

The Mortgage Relief Fund was launched by Citizens Bank, Sovereign Bank, TD Banknorth, Webster Bank and Bank of America to assist New England borrowers facing interest rate resets. The program, started with $125 million in funding commitments, is targeted at current borrowers who are or will be affected by higher payments from resetting rates. Qualified prospects must have a positive equity position in the property and must occupy it.

Arizona's Governor Janet Napolitano announced she met with mortgage servicers, including J.P. Morgan Chase, GMAC, Wells Fargo, Washington Mutual and Countrywide, and emerged with a plan to fight foreclosures. The plan includes stepped up efforts to get delinquent borrowers and those who face resets on the phone, promotion of the HOPE NOW program and streamlining of modifications.

"The group will also exchange data with state agencies to allow Arizona to better track problem areas, as well as the success of these strategies," the announcement said. "As of September 30th of this year, more than 24,000 loans in Arizona are either in foreclosure or are seriously delinquent; 1 in 5 subprime loans is predicted to end in foreclosure."

Over in Chicago, Bank of America committed $5 million in local grants to fund several initiatives, including a $2 million foreclosure avoidance initiative. BoA, which said it plans to donate $1.5 billion to nonprofit organizations over a 10-year period through The Bank of America Charitable Foundation, said $1 million will go to Neighborhood Housing Services of Chicago.

In Connecticut, Webster Bank N.A. announced it was selected as a lender by the Connecticut Housing Finance Authority for the $50 million Connecticut Fair Alternative Mortgage Lending Initiative & Education Services Program. The program provides below market rates on refinances to borrowers in adjustable-rate mortgages who qualify based on their income, payment history and property type.

Countrywide Financial Corp. announced a joint home retention initiative with the Association of Community Organizations for Reform Now, or ACORN will be released shortly after New Years. The plan will focus on helping subprime borrowers avoid foreclosure.

Calabasas, Calif.-based Countrywide reported 12,565 loan modifications were completed in November, compared to 799 in November 2006. From Jan. 1, 2007, through Nov. 30, Countrywide said it completed 77,091 total workouts, including 45,735 loan modifications.

A book authored by Richard Geller promises to help delinquent borrowers mitigate further losses without refinancing. Mortgage Relief Formula, described as "the book lenders don't want you to see," discusses short sales, loan modifications and negative equity, according to an announcement.

Short sales were also a solution touted in an announcement from Second Opinion Solutions Group LLC. The group said lenders may settle for less than the full loan amount with a short sale or considering refinancing less than the full balance in a short refinance. Forebearance, pre-forelcosure sales, deeds in lieu of foreclosure and loan modifications were also suggested as alternatives to foreclosures.

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

e-mail: [email protected]

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