Foreclosure Starts, meaning a property enters into Foreclosure, maintains its declining momentum while Short Sales continued to increase in October. This is based on the data reported by HOPE NOW, an industry coalition of mortgage servicers, mortgage insurers, investors and nonprofit counselors.
According to HOPE NOW. completed short sales 38,518 Short Sales were completed in October, which is about a 13 percent increase from September. Since 2009, over one million short sales have been competed which steadily contributes to the decrease of Foreclosure over the years.
Foreclosure starts—which totaled 113,555— showed a major decline and decreased by 24 percent from the previous month. While starts drops, actual foreclosure sales increased 12 percent during the same period, with sales totaling 71,080 compared to 62,645 in September. This is another contributor in the drop of the total number of available foreclosures in the market.
Faith Schwartz, executive director of HOPE NOW, says the significant decrease in foreclosure starts is worth noting, but cautioned one month does not indicate a trend. “With multiple servicing transfers, AG settlement activity, and seasonal adjustments, we will be working with more volatility around monthly data for some time,” she said.
HOPE NOW also reported nearly 6 million stressed homeowners have received a modification since 2007. 4.8 million of these modifications were proprietary loan modifications and 1.1 million of them were accomplished through the government’s Home Affordable Modification Program (HAMP).
In the month of October, HOPE NOW reported servicers modified 88,583 loans for homeowners which is an increase from 74,329 in September. 72,580 of these modes were granted by proprietary modifications and 16,003 were modified by HAMP.
“The combination of loan modifications and short sales, completed by the industry in the month of October, means that close to 130,000 homeowners received a permanent, alternative to foreclosure,” said Schwartz.
The bad news is, the number of homeowners who needs to seek a modification increased, with delinquencies is inching higher in October. In October, the number of homeowners who were at least 60 days past due on their mortgage payments goes up by 3 percent to 2.54 million from September. Most of the people who are 90 days or more behind on the mortgage are not able to qualify for a loan modification any more due to late fees, interests, and their more permanent loss of income. People who qualify for loan modification are the ones who have suffered a temporary or minor decrease in income. If the borrower has and is experiencing total income loss in a more permanent situation, they no longer are candidates of loan modification and their best option is a short sale.