Gap Widens Between Non-Foreclosure Solutions and Foreclosure Sales

The gap between non-foreclosure solutions and foreclosures widened even further in November 2014, according to data recently released by HOPE NOW, the voluntary private sector alliance of mortgage servicers, investors, and non-profit counselors.

Non-foreclosure solutions outpaced foreclosure sales by nearly a five to one ratio, compared to a four to one ratio year-to-date in 2014. In all, approximately 136,000 homeowners received a non-foreclosure solution (loan modification, short sale, deed-in-lieu of foreclosure, or workout plan) in November, compared to 28,000 completed foreclosures during the month. For the first 11 months of 2014, HOPE NOW reported 1.7 million non-foreclosure solutions compared to about 426,000 completed foreclosures.

The 136,000 non-foreclosure solutions pushed the industry total to higher than 23 million since HOPE NOW began tracking the data in 2007.

"Although November tends to be a slower time of the year for foreclosure activity, HOPE NOW is still proud of the progress made by its members to offer five times as many non-foreclosure options during the month," said Eric Selk, executive director at HOPE NOW. "The total solutions offered by the industry since the crisis started are a reminder of the hard work of our membership."

The number of foreclosure sales reported for November, 28,000, is the lowest total for any one month since HOPE NOW began tracking the data in 2007. It represents a 27 percent decline from October, when 39,000 foreclosure sales were reported. Foreclosure starts also declined month-over-month in November by 8 percent from 65,000 down to 60,000.

HOPE NOW reported 34,000 permanent loan modifications for November, about 23,000 of which were completed through proprietary loan mods and about 11,000 of which were facilitated through the government's Home Affordable Modification Program (HAMP). The number of permanent loan mods in November declined by 14 percent from October (39,000), corresponding with the declining number of foreclosures. The number of permanent loan mods recorded since 2007 stands at 7.3 million.

Of the non-foreclosure solutions reached in November, the second and third most popular avenues, respectively, were short sales (8,700 completed during November, a 17 percent drop from October) and deeds-in-lieu of foreclosure (1,900 completed during November, a decline of 20 percent from October).

Selk said that in 2015, HOPE NOW's members will continue to concentrate outreach efforts on markets that are still recovering.

"Our outreach efforts are a collaboration between HOPE NOW members and major partners, such as Making Home Affordable, and local community leaders," he said. "The first two borrower events for 2015 will be in California and are scheduled for Oakland in February and San Bernardino in March. Additionally, HOPE NOW is planning several community roundtables designed to engage the industry, non-profits and local partners in a holistic approach to finding viable housing solutions."