Private lenders in the U.S. increased home-loan modifications in the second quarter, following a $25 billion settlement of wrongful foreclosure investigations, according to a government report.
Permanent and trial mortgage modifications under non-government programs climbed 22 percent to 242,463 while those done under the government’s Home Affordable Modification Program fell 53 percent from a year earlier to 53,723 loans, the U.S. Office of the Comptroller of the Currency said today.
The five largest U.S. loan servicers, including Bank of America Corp. and JPMorgan Chase & Co., agreed to a $25 billion settlement in February that required them to provide more assistance programs to delinquent homeowners. The number of new borrowers getting the government-backed modifications has declined because of stricter qualification rules than private plans on standards such as debt-to-income ratios.
“Under the settlement, more people will get a modification,” Bruce Krueger, a senior mortgage expert with the comptroller’s office, said in a conference call with reporters.
Lenders have struggled to find ways to reduce losses as more than 11 percent of mortgages were delinquent or in foreclosure at the end of June. The percentage of mortgages that were current and performing at the end of the quarter was 88.7 percent, compared with 88.9 percent the previous three months and 88.1 percent a year earlier, according to the Office of the Comptroller, a division of the Treasury Department.
Servicers implemented 416,036 new loan modifications during the quarter, while starting 302,636 new foreclosures. The biggest change was among non-government trial modifications, which increased 74 percent during the quarter and 50 percent from a year earlier to 178,528.
The loans reviewed by the report comprise 60 percent of all mortgages outstanding in the U.S., or 30.5 million loans totaling $5.2 trillion in principal balances.