More Than A Third Of Home Loan Modifications Canceled
What’s happening to homeowners who’ve sought a home loan modification through the federal Home Affordable Modification, or HAMP?
More than a third of the 1.24 million trial loan modifications made through May under the program have been canceled, according to federal authorities.
But the federal government claims that borrowers who end up with a canceled loan modification either end up with another loan modification or become current on their loans.
Even those who end up with loan modification under HAMP may still face trouble, according to a startling report released just a few days ago. Fitch Ratings predicts that most homeowners who’ve received a loan modification through HAMP will default within a year. The redefault rate within a year is likely to be 65 percent 75 percent under HAMP for loans that aren’t backed by the federal government, according to Fitch.
That’s tough news for many states, including Connecticut, which have seen foreclosure activity increase this year. Foreclosures have jumped 37 in the first four months of the year, compared to the same period in 2009, according to The Warren Group.
The only bright news, if you can call it that, is that the number of lis pendens filings by lenders to start foreclosure proceedings against property owners has remained relatively flat. There were 9,839 lis pendens flings from January through April, up about 1.7 percent from 9,669 a year ago.