Has Streamlining Benefited Loan Mods?
Alison Rich has a long-time tenure in the writing and editing realm, touting an impressive body of work that has been featured in local and national consumer and trade publications spanning industries and audiences. She has worked for DS News and MReport magazines—both in print and online—since they launched. Demand Propels Home Prices Upward 2 days ago Back in 2013, Fannie Mae launched a streamlined, no-documentation loan modification program to help more beleaguered borrowers dodge foreclosure and remain in their homes. Contrary to expectation, the innovative program not only has a high usage rate but also increases the overall success of mortgage modifications by 34 percent, according to a new Urban Institute research. “If the streamlined approach had been available over the entire 2012–15 period, it would have prevented 6,100 additional foreclosures each year on Fannie Mae mortgages,” the research said. “This provides compelling evidence that the streamlined approach is beneficial to loss mitigation.”Just how beneficial? When looking at data from 2012 to 2015, the rate at which distressed borrowers gave the go-ahead to participate in a modification—aka, the “take-up” rate—rose from 20.2 percent without streamlining to 29.2 with the program, the report says, (that’s a 9-percentage-point, or 44.6 percent, improvement).Advantages aside, streamlined mods post a higher redefault rate, even after controlling for borrower characteristics. The reason? Applicants who submit documentation might be more motivated to make the modification work, the report explains.The success rate for streamlined modifications totaled 64.1 percent in the first 36 months following modification, compared with a 68.9 percent success rate for standard modifications (a program with the same payment but requiring more documentation), the report indicates.Some 15.9 percent of delinquent borrowers continue to hand in the full documentation, the report found, while 13.3 percent accept the modification offer requiring fewer supporting documents. That said, the study noted a smaller net benefit (24.6 percent) for people who give a nod to a streamlined mod. Once the streamlined option comes into play, the net benefit of the entire modification program is 7.9 percent or an almost 34 percent improvement over the baseline.And that’s proof enough to earn the program an unequivocal thumbs up, the Urban Institute said.“Our research … confirms that the streamlined modification approach adopted in this Flex Mod program is a positive innovation,” the Urban Institute said. “We expect to see its widespread adoption by portfolio lenders and the private-label securities industry as well.” The Best Markets For Residential Property Investors 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Has Streamlining Benefited Loan Mods? Data Provider Black Knight to Acquire Top of Mind 2 days ago Borrowers Fannie Mae Foreclosure Loan Modifications Urban Institute 2018-07-21 Alison Rich in Daily Dose, Featured, News, Servicing Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Print This Post Related Articles The Best Markets For Residential Property Investors 2 days ago Demand Propels Home Prices Upward 2 days ago Share 1Save Subscribe Home / Daily Dose / Has Streamlining Benefited Loan Mods? About Author: Alison Rich Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Sign up for DS News Daily Data Provider Black Knight to Acquire Top of Mind 2 days ago Tagged with: Borrowers Fannie Mae Foreclosure Loan Modifications Urban Institute Previous: The Factors Impacting Real Estate Trends Next: What Servicers Have Learned from the Hurricanes of 2017 Servicers Navigate the Post-Pandemic World 2 days ago July 21, 2018 1,790 Views Servicers Navigate the Post-Pandemic World 2 days ago