Mortgage Lenders Try To Help

February 10, 2008

The mortgage industry is trying very hard to help borrowers who find themselves in serious trouble in making their payments, particularly those with rising payments with their adjustable-rate mortgage (ARM). For example, about 54,000 mortgage loans were modified and another 183,000 borrowers had their loans structured with formal repayment plans during the third quarter of last year, according to a report from the Mortgage Bankers Association. By comparison, foreclosure actions were started on about 384,000 loans, but of those loans, 63 percent were cases where the borrower did not live in the home or where the borrower did not respond to repeated attempts by the lender to contact them.

"The mortgage industry is taking major steps to help those borrowers who can be helped," said Jay Brinkmann, MBA’s vice president. "It is likely that the number of loan modifications for subprime ARMs will continue to grow through the outreach efforts of the industry. The U.S. Treasury Department is playing a crucial role in bringing the lending community together to develop approaches to deal with the current problems.

While investor-owned properties account for about 18 percent of foreclosure starts for subprime ARM loans, they account for about 28 percent of subprime fixed-rate foreclosure starts, 18 percent of prime ARM foreclosure starts, and 14 percent of prime fixed-rate foreclosure starts. California is showing the fastest increase in foreclosures.

Posted in Lending, Real Estate