Increased Loss Mitigation Failing to Keep Pace with Defaults, Foreclosures

The Federal Housing Finance Agency reported yesterday that Fannie Mae and Freddie Mac significantly stepped up their foreclosure prevention activities in the first  quarter of 2009. But those efforts failed to keep pace with both the jump in serious delinquencies and foreclosures started with government-sponsored enterprise mortgages during the three-month period. The latest FHFA numbers show that completed actions to prevent foreclosure–including loan modifications–rose to 86,600 at the GSEs. But those numbers were dwarfed by the rise in 60 days or more delinquent loans (173,700) and the huge jump in foreclosures started on Fannie/Freddie loans in the first quarter (243,800).

Inside Mortgage Finance is hosting an audio conference on the latest loss mitigation efforts tomorrow, Thursday June 25, at 3 pm EDT. Click here for more info.

CitiMortgage SVP to Speak on Loss Mitigation Efforts at IMF Event

Bryan Bolton, senior vice president for loss mitigation at CitiMortgage, has joined the lineup of experts who will be discussing the latest innovations and strategies for reducing foreclosures and losses at Inside Mortgage Finance’s upcoming audio conference on loss mitigation. The event, Loss Mitigation Update: the New Rules, is slated for June 25 at 3 pm EDT and also will feature Meg Burns from HUD, legal expert Don Lampe from Womble Carlyle Sandridge & Rice and Tom Deutsch from the American Securitization Forum. Click here for more info.

Treasury Still Working on Asset Purchase Plan

Treasury Secretary Timothy Geithner confirmed yesterday that the Obama administration will unveil a plan to purchase bad assets from banks within a few weeks. The plan will reportedly provide government financing to private investors willing to purchase the assets.

Separately, the Mortgage Bankers Association and 30 other trade groups sent a joint letter to leaders of the House Financial Services Committee this week urging immediate changes to mark-to-market accounting to limit the “spiral of accounting-driven financial losses.” The letter said “the inability of businesses, investors and government to properly value assets in disorderly markets has created uncertainty and a loss of confidence that has led to a self-reinforcing cycle of write-downs and further economic contractions.”

One-Third of Pre-foreclosure and Short Sales Fail, New Study Finds

Despite an industry push to limit foreclosure losses via pre-foreclosure and short sales, one-third of these transactions on average fail, according to a new study sponsored by Inside Mortgage Finance.

The study, based on a nationwide survey of real estate agents that focused on loss mitigation practices, found that mortgage servicers on average take four and a half weeks to provide an answer on potential short sales. This compares with just 1.8 weeks to provide a  “yes” or  “no” on REO offers. Not surprisingly, the research found that efforts to do more short sales are being stymied by the fact that lenders can’t respond quick enough to close pending deals.

The survey of real estate agents was conducted in March by Campbell Communications and produced the first national rating of major loan servicers on their loss mitigation performance. Click here for more info.