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| Title: | MBA Study: Industry Initiated More Than 235,000 Loan Modifications and Repayment Plans in 3rd Quarter | | Source: | MBA | | Date: | 1/17/2008 |
|  Related Document(s): | | | | |
Washington, DC (January 17, 2008) – The mortgage industry modified an estimated 54,000 loans and established formal repayment plans with another 183,000 borrowers
during the third quarter of 2007, according to a report issued today by the Mortgage Bankers Association. By comparison,
foreclosure actions were started on approximately 384,000 loans, but of those foreclosures, 63 percent were cases where the
borrower did not live in the home, the borrower did not respond to repeated attempts by the lender to contact them, or where
the borrower failed to perform on a repayment plan or loan modification that was already in place.
“The mortgage industry took major steps during the third quarter to help those borrowers who could be helped,” said Jay Brinkmann,
MBA’s Vice President of Research. The numbers of loan modifications, negotiated repayment plans established, and other actions
to help borrowers are large and compare favorably with the number of foreclosure actions started, particularly when those
foreclosures are adjusted to remove the borrowers who clearly could not be helped.”
“It is likely that the number of loan modifications for subprime ARMs will continue to grow through the outreach efforts of
the industry,” Brinkmann continued “Particularly through the HopeNOW Alliance that includes counselors, mortgage market participants
and mortgage servicers working together to try and help avoid foreclosures whenever possible. The U.S. Treasury Department
has played a crucial role in bringing the lending community together to develop approaches to deal with the current problems.”
For subprime ARM loans there were approximately 13,000 loan modifications and 90,000 repayment plans established in the third
quarter. For borrowers with subprime fixed-rated loans, loan servicers instituted 15,000 loan modifications and 30,000 repayment
plans.
The report found that while approximately 166,000 foreclosure actions were started on subprime ARM loans during the third
quarter, approximately 18 percent of those were on investor-owned properties, and in 21 percent of the cases the borrower
either could not be located or would not respond to repeated attempts by the lenders to contact them. Subprime ARM borrowers
who already had a repayment plan or loan modification in place but were unable to avoid default anyway accounted for 40 percent
of the subprime ARM foreclosures.
The MBA report is based on responses from mortgage servicers covering about 33 million mortgage loans, or approximately 62
percent of the loans outstanding. The numbers are grossed up to reflect the partial coverage of the market.
While investor-owned properties accounted for 18 percent of foreclosure starts for subprime ARM loans in the third quarter,
they accounted for 28 percent of subprime fixed-rate foreclosure starts, 18 percent of prime ARM foreclosure starts and 14
percent of prime fixed-rate foreclosure starts. In California, the state showing the fastest increase in foreclosures started,
investor-owned properties accounted for 19 percent of subprime ARM foreclosure starts and 20 percent of subprime fixed-rate
foreclosure starts. In Florida, the other state seeing a rapid increase in foreclosures, investors accounted for 21 percent
of subprime ARM foreclosures and 27 percent of subprime fixed-rate foreclosures.
Cases where the borrower could not be located or would not respond to attempts by the mortgage servicer to contact them accounted
for 21 percent of subprime ARM foreclosure starts, 21 percent of subprime fixed-rate foreclosure starts, 17 percent of prime
ARM foreclosure starts and 33 percent of prime fixed-rate foreclosures started.
### The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mortgagebankers.org.
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