Federal Reserve Bank of Boston Report on Home Loan Modifications
A couple of months ago the Federal Reserve Bank of Boston issued a report on the status of Boston real estate mortgage loan modifications. The federal government has included some different incentives in an attempt to entice mortgage lenders, including those that hold loans in the Boston real estate market, to enter into loan modifications as a means of allowing some home owners the ability to avoid having to default on their loans.
Initially, some mortgage lenders – again, including some in the Boston real estate market – were balking at providing home mortgage loan modifications. They feared that the costs associated with these modification agreements would prove to be to costly for them.
However, after the release of that initial report from the Boston Fed, a bit more analysis was undertaken which tended to demonstrate that the costs to a mortgage lender of having to pursue a foreclosure significantly were greater than those which are encountered in home loan modifications. Therefore, the number of mortgage lenders that undertook home loan mortgage modifications started to tick upwards.
Unfortunately, lenders are starting to find that when they do grant home loan mortgage modifications, approximately 30 to 45 percent of those home owners who receive these modifications eventually are ending up in foreclosure nonetheless. Thus, there are some lenders that are moving back to the position that allow for modifications is not in their best financial interest and that they merely are putting off a foreclosure action.
The experience within the Boston real estate market has been fairly similar and along the lines of what is occurring more general across the United States. However, with this bit of ongoing grim news noted, some experts are starting to see at least a glimmer of light at the end of the proverbial tunnel.
There are analysts who believe that if some of more positive trends that are starting to appear in both the national and Boston real estate markets start to take a firmer hold over the coming six months, more lenders will become more willing to undertake home loan modifications. Moreover, the federal government appears primed to offer certain lenders some additional incentives to allow for more home loan modifications in the future.
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