Fed Reporting Fewer Loan Mods
Loan giant Freddie Mac is reporting that loan workouts and loan modifications have declined by nearly 50% compared to the same time period in 2011. Loan workouts have dropped to around 14,000 in the first quarter of 2012, compared to nearly 35,000 in the first quarter of 2011. Many experts are saying that this may be an indication that the number of distressed properties on the market may be due for a big decline. The decline is attributed to a drop of seriously delinquent loans by more than 10% compared to last year. Fewer foreclosures for sale would possibly help home values increase and entice more home sellers to put their homes up for sale. Foreclosure related sales account for around 25% of the total market in residential sales in 2011.
Freddie Mac also reported a big increase of the number of loans staying current after 2 years from completing a modification to over 60%. A lot of the change is due to the implementation of the Standard Modification on January 1st, which was made mandatory to lenders by the federal government. The over projections indicate that more banks will be using creative work-out options for delinquent homeowners such as loan modifications, forbearance and even mortgage principle write downs. A new federal agreement with banks in February mandated that banks set aside $17 Billion for non-foreclosure option aimed at keeping people in their homes.