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LOAN MODS RISE IN AUGUST, FORECLOSURES REMAIN STEADY Servicers completed 67,000 mortgage loan modifications in August, bringing the total for the year to 580,000, according to HOPE NOW, a voluntary private-sector alliance. Loan modifications increased 8 percent in August when compared to the month prior, according to HOPE NOW; and year-to-date loan modifications outpace foreclosure sales by about 142,000. The approximately 67,000 modifications completed by servicers in August include 48,000 proprietary modifications and 19,069 modifications completed through the government's Home Affordable Modification Program (HAMP). About 23,000 short sales also took place in August, HOPE NOW's data shows. "The bottom line is that there are more tools for consumers than ever before to handle mortgage challenges," said Eric Selk, executive director at HOPE NOW, with the release of the alliance's August data. The majority of proprietary modifications completed in August came with fixed interest rates of at least five years and reduced monthly payments and principal, according to HOPE NOW. These characteristics indicate "sustainability and affordability for homeowners," the organization said in its report. Eighty-eight percent of proprietary modifications featured fixed interest rates for at least five years, and 82 percent came with reduced principal and monthly payments. Additionally, 16 71 percent of proprietary mods in August lowered borrowers' principal and interest payments by more than 10 percent. While loan modifications increased over the month, foreclosure sales remained about the same at 59,000. Foreclosure starts decreased from 102,000 in July to 101,000 in August. At the same time, 60-plus-day delinquencies declined 2.5 percent to 2.18 million, according to HOPE NOW. "HOPE NOW is pleased to report that since 2007, more than eight million permanent, non-foreclosure solutions have been completed by our members, on behalf of homeowners across the country," Selk said. Since 2007, the industry has completed 5.4 million proprietary modifications, and about 1.26 million homeowners have received modifications through HAMP since its debut in 2009, HOPE NOW reports. Also since 2009, the industry has completed about 1.36 million short sales. HOPE NOW offers events throughout the country to help homeowners find foreclosure alternatives that suit their needs. A recent event drew nearly 900 homeowners in Maryland. HOPE NOW, in conjunction with Making Home Affordable is hosting a borrower outreach event in Ft. Lauderdale, Florida, and another event aimed at active military and veterans co-hosted by the Federal Reserve Bank of Richmond in Virginia Beach, Virginia, later this month. AS REFI ACTIVITY FADES, LPS PREDICTS RISE IN HOME EQUITY LOANS The number of homeowners eligible for refinancing has shrunk from about 10 million in December 2012 to about 5.7 million as of August, according to a study by Lender Processing Services (LPS). LPS cites heightened refinance activity over the past few years and rising interest rates as reasons for the decline. "Over half of borrowers are now 'out of money' with respect to refinancing," said Herb Blecher, SVP at LPS. Also supporting this trend, LPS' data shows a decline in prepayment activity. Prepayment activity often serves as a predictor of refinance activity. "We have seen prepayments decline by more than 30 percent since May, when mortgage interest rates began climbing approximately 100 basis points to where we are today," Blecher noted. While refinances are on the decline, LPS sees a market ripe for home equity lines of credit. "After bottoming out at the beginning of 2012, home prices are now at their highest levels since 2009, and borrowers who bought or refinanced within the last few years are quite likely to have accumulated additional equity in their homes," Blecher said. "Based upon LPS' analysis of historical borrowing patterns and home value trends, it is possible that we could see an increase in secondlien borrowing among those who have locked in their first mortgages at very low rates and who wish to tap their equity without refinancing into a higher rate," according to Blecher. LPS also noted a decline in foreclosure starts nationwide but a simultaneous rise in foreclosure sales. The national delinquency rate was 6.2 percent as of August, according to LPS, a 3.31 percent decline from the previous month. The highest concentration of delinquent loans can be found in Florida, Mississippi, and New Jersey. The states with the lowest concentration of delinquent loans are Wyoming, South Dakota, and North Dakota. New York has the largest foreclosure pipeline, according to LPS' report. While judicial states continue to register large foreclosure pipelines, a few non-judicial states with recent changes in their foreclosure processes are also experiencing clogged pipelines. For example, California's pipeline has grown 70 percent since the state adopted its Homeowner Bill of Rights earlier this year. A Supreme Court ruling in Massachusetts altered its foreclosure process, leading to a 136 percent increase in the state's foreclosure pipeline since the second quarter of last year, according to LPS.

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