Resets May Lead To Higher Loan Modification Defaults
By Jay Weller
According to The Mortgage Monitor Report by Black Knight Financial Services for February, 2014, about 95% of rate reduction modifications are still facing resets.
Although Loan Modifications have been declining for more than a year, Loan Modifications through the Home Affordable Modification Program (HAMP), a program under the jurisdiction of the Federal Housing Administration, have been increasing, largely because of modifications the FHA made to increase eligibility of Homeowners.
Black Knight Financial Services claims that the majority of the Resets are Controlled Resets, which should not cause dramatic changes to Homeowners’ monthly mortgage payments in the near future. Mortgage Modification defaults are about 30% higher for Borrowers who have Negative Equity or are underwater, in contrast to Borrowers with Positive Equity.
Black Knight also reported that the Consumer Financial Protection Bureau has promulgated new rules regarding Foreclosures, wherein a Lender cannot Foreclose unless the Borrower is more than 120 days delinquent. Foreclosure Sales are now at the lowest rate since 2007.
The States with the lowest percentage of delinquent Home Loans are Colorado, Montana, Arkansas, South Dakota and North Dakota.
The States with the highest percentage of delinquent Home Loans are Mississippi, New Jersey, Florida, Louisiana and New York.