Mortgage Rate News

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There is some interesting mixed-bag news right now in the world of foreclosures. Many are watching foreclosures for trends that indicate the worst of the foreclosure crisis may be over. While it is somewhat disheartening that foreclosure starts have increased, the good news is that some of them are being stopped before entering the final stage of foreclosure. Indeed, HousingWire offers this information on recent foreclosure trends:

Foreclosure starts rose 7.1% to their second-highest record. The rate of loans rolling into the final foreclosure stage, however, are narrowing back toward levels seen in mid-2006 and remain below ‘07 and ‘08 levels as servicers step up loss mitigation efforts, LPS said.

These loss mitigation and foreclosure prevention efforts taken in Q109 and Q209 so far outperform the efforts taken in all of last year. Modifications made in the first two quarters of 2009 experienced lower redefault rates in their initial three months than those modifications made in every quarter of 2008.

It appears that increased efforts to succeed at loan modification might be helping to stop foreclosure. Mortgage lenders are trying to limit their losses, and in some cases that may mean providing new loan terms for borrowers who are having difficulties making their payments. Loan modification can include some of the following tactics to prevent foreclosure:

• Lower interest rate.
• Longer repayment term.
• Lower principle.

All of these things can help lower the monthly mortgage payment that someone has to make, creating a situation in which they might be able to afford the mortgage after all. Additionally, home sales have increased, and that may be an indication that buyers are looking for homes in the process of foreclosure that they can be at a lower price. Short sales and other types of sales may be helping prevent homes from moving into the final stages of foreclosure.

In any case, this is a positive development. One can only hope that the new foreclosures that are being startednow do not make it to the final stages.