I've recently come across some information that suggests that Loan Modifications are starting to reduce the number of homes that end up in foreclosure. The amount of California foreclosure cancellations increased 26.5% in December to 13,243, primarily because of loan modifications. Plus, for the first time the number of canceled foreclosures in California overtook foreclosures reaching real-estate owned (REO) status.
In December 2009, the amount of foreclosures heading back to the banks, REO, dropped 11.9% from the previous month to 12,437. It looks like significant declines in foreclosure discounts by lenders drove the decrease in sales to third parties. Lenders discounted the opening bid on foreclosure auctions on the courthouse steps by nearly 40% for most of 2009, but in December lenders offered only 33.7% discounts.
Given the amount of pressure servicers face to complete more modifications under the Home Affordable Modification Program (HAMP), it should follow that more homeowners should be able to stay in their homes.
Under HAMP, the US Treasury Department provides capped incentives to servicers for the modification of loans on the verge of foreclosure. According to the latest report from the Treasury, there were 30,000 permanent modifications up to November 09. Previously many banks had been focusing on collecting documents. It seems that now more lenders are converting more loan modification trails into permanent modifications.
The timing of the increase California foreclosure cancellations, may be related to a required one-year delay before a foreclosure sale.
These numbers may not mean much to someone who is having difficulty keeping up with their mortgage. The main thing that I would like to emphasize is that there is help available and if you find yourself in a difficult circumstance with your mortgage, please seek some advice, sooner rather than later. There are many options available to you and it looks like many California Homeowners who have been on the verge of foreclosure have been able to take advantage of some of the programs available that can help to keep you in you home.
If you have further questions or would like some advice in this area, please don't hesitate to contact me. I offer a free confidential initial consultation, where you can find out what you need to know and what your options are. There are many choices available, let me help you work out which option is best for you.