Friday, December 28, 2012

Loan Modifications Statistics are Beginning to RISE!!

Many people evaluate the housing market by foreclosure statistics. I have previously blogged that this methodology is fraught with inconsistent variables that alter the findings (such as lenders purposely holding back foreclosure filings). Foreclosure activity remained elevated in the third quarter of 2012, but homeowners are fighting to stay in their homes. According to a report by the Office of the Comptroller of the Currency (OCC), servicers initiated 252,604 new foreclosure actions during the third quarter of 2012. Office of the Comptroller of the Currency Report Homeowners responded with 382,899 home retention attempts. Home retention actions include modifications and shorter-term payment plans. Of course, some of those home retention attempts address foreclosure actions initiated prior to 2012. The OCC reports that home retention efforts appear to be finally starting to work. Home Affordable Modification Program (HAMP) modifications rose 10 percent over Q2, and other forms of modifications increased by 54.2 percent. The Home Affordable Refinance Program (HARP) is also gaining ground, providing more than 80,000 refinanced mortgages in October 2012 alone. HARP article. On the basis of HARP II’s success, many lawmakers are hoping that a new version, HARP III, could continue to expand refinancing options to sub-prime borrowers who have remained current on their mortgages. It is likely (in my opinion) that the loan modification increase is due to the settlement with Attorney Generals in 49 states (Oklahoma did not join the litigation). Thanks to myriad factors like robo-signing, the foreclosure fraud settlement, seasonal trends, and foreclosure moratoria, many analysts claim it is impossible to actually get a clear idea about where the housing market is going. I believe that it is not practical to have a clear idea of where the housing market is…let alone predict where it will be in the short or long term. When you factor in the looming fiscal cliff, the uncertainty becomes overwhelming (even though I believe that the national media has grossly exaggerated the ramifications of the fiscal cliff. The name implies more danger than is really present). Paddy Deighan J.D. Ph.D

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