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Modification Statistics and Such

The volume of loan modifications had been heading down as the government’s program was kicking in. But the number recently rose. Meanwhile, credit unions were advised to consider modifications to offset rising delinquency, and two companies hope to help servicers with their modifications.

Second-quarter loan modifications completed by U.S. banks were 142,262, according to the OCC and OTS Mortgage Metrics Report released by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Modifications fell from 190,357 the prior quarter but were higher than 125,348 the prior year.

The quarterly decline was offset by the implementation of the Home Affordable Modification Program, which saw 59,571 trial plans implemented. Almost half of second-quarter modifications were either Alt-A or subprime loans.

CitiMortgage announced that it completed 5 percent fewer loan modifications during the second quarter than it did in the first quarter.

But during August, U.S. mortgage servicers completed 85,859 loan modifications, HOPE NOW reported. Volume rose from 80,167 in July and 78,853 during August 2008. The latest month included 46,644 prime mortgage modifications, while 39,216 were subprime.

HOPE NOW’s findings were based on data submitted by its 26 member servicers. The group services around 38 million loans and account for around 85 percent of the industry total.

Faith Schwartz, executive director of HOPE NOW, suggested in an announcement that a recent decline in foreclosures was impacted by a rise in modifications.

A supervisory letter from the National Credit Union Administration acknowledged an unprecedented level of defaults and foreclosures at U.S. credit unions. NCUA called on credit unions to consider loan modifications in their mitigation efforts.

“A prudently underwritten and appropriately managed mortgage loan modification, consistent with safe and sound lending practices, is generally in the long-term best interest of both the borrower and the credit union,” the regulator said.

Wells Fargo & Co. reported last month that it has modified 251,244 loans under its own programs. Including trial and completed modifications under the HAMP, Wells said it started or completed 284,416 modifications so far this year.

Wisconsin’s Department of Justice issued a warning to borrowers to be wary of firms making loan modification offers. Complaints about these services have been rising. The state offered five tips — including avoiding paying up-front fees and staying in touch with servicers.

Between March and August, Florida’s attorney general received 16,127 calls and complaints about loans modification firms, the Sun-Sentinel reported. The state has filed 15 civil lawsuits against such firms, is actively investing 83 companies and has 99 more firms under review.

Florida attorney Daniel Fox was responsible for 50 of the complaints, according to the Daily Business Review. Fox, who has been disbarred, allegedly collected nearly $2,000 in modification fees from one borrower without doing any work.

A new component servicing program designed by Marix Servicing LLC — a specialty default servicer — helps lenders reach out to Hispanic borrowers about loan modifications. Dubbed the Hispanic Homeowner Outreach Program, the offering helps servicers overcome cultural and language barriers. Inc. went live Saturday and “is free of charge to homeowners and participating financial institutions.” says it provides online rule-based decisioning for residential lending, while affiliate Mortgage Workout Center sells educational media for borrowers to servicers.

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