Hot on the heels of Bank of America's announcement earlier this week of a surge in the number of home loan modifications, Wells Fargo reports it too, is making progress in reworking troubled mortgages.
As of Jan. 31, Wells Fargo said it had 137,128 active trial and completed federal Home Affordable Modifications in place, including 17,652 permanent modifications-double the number of permanent modifications as of the end of December-and 7,554 permanent modifications pending completion.
Both banks' progress reports follow prodding from the Obama Administration, which has been frustrated by the lack of progress under its Homeowner Assistance Modification Program.
In addition to an improved record under HAMP, Wells Fargo said it has done more than 350,000 non-HAMP modifications, including active trials in place as of the end of January 2010 and modifications completed since the beginning of 2009.
From October 2009 through January 2010, Wells Fargo said it initiated or completed three modifications for every one foreclosure sale on owner-occupied properties. In the past 12 months, fewer than two percent of the loans secured by owner-occupied homes and serviced by Wells Fargo proceeded to a foreclosure sale, the company reports.
In the first year of the White House's HAMP program, which was designed to help homeowners avoid foreclosure, very few loans were actually modified. Homeowners complained bitterly about the frustrations of trying to deal with loan servicers, who demanded the same documents over and over and never seemed to advance the process.
Delaying the Inevitable?
Some industry analysts, meanwhile, predict the foreclosure problem is likely to get worse this year, despite an improved performance by servicers.
"The mortgage crisis may be far from over," said Diane Westerback, a managing director at Standard & Poors, who authored a new report this week on the housing market. "The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come."
And banks could lose their new-found enthusiasm for modifying mortgages. Westerback's study predicts loan servicers will step up attempts to repossess properties this year because about 70 percent of modifications failed in the last six months.
The report concludes that HAMP "may simply have delayed the inevitable, creating the demonstrated shadow inventory of troubled loans."
