Mortgage Loan Modifications Jump

jumping with house
Private lenders in the US have increased mortgage loan modifications in the second quarter of this year following a $25 billion settlement regarding wrongful foreclosure investigations, according to a report by the US Department of the Treasury.

Permanent and trial mortgage loan modifications under non-government programs rose 22 percent to 242,462 across the nation. Permanent and trial mortgage loan modifications under the government’s Home Affordable Modification Program (HAMP) fell 53 percent from a year earlier to 53,723 loans, according to the report.

The largest home financing servicers include Bank of America and JP Mortgage Chase, both of which agreed to the $25 billion settlement in February. That settlement required the two lenders to offer more assistance programs to delinquent homeowners. The number of new borrowers who are receiving government-backed modifications has significantly declined as a result of stricter qualification rules rather than simple factors such as debt-to-income ratio analyses.l

“Under the settlement, more people will get a modification,” said Bruce Krueger, a senior mortgage expert with the comptroller’s office in an interview with Businessweek.

Lenders have faced difficulty in the past as they struggled to search for ways to reduce losses brought about by foreclosures. The percentage of home financing that was current and performing at the end of the quarter was 88.7 percent which was a 0.02 percent drop from three months prior. A year ago they stood at 88.1 percent, according to the Office of the Comptroller.

Mortgage servicers have implemented 416,036 new financing modifications during this year’s second quarter, while simultaneously filing for 302,636 new foreclosures. The largest change pertained to non-government trial modifications, which rose 50 percent from one year earlier to 178,528.

Mortgages that were reviewed by the report account for roughly 60 percent of all outstanding mortgage loans in the US. This includes 30.5 million loans, totaling $5.2 trillion in principal balances.