As distressed homeowners continue to utilize options to avoid foreclosure, one organization reported a spike in mortgage modifications in May.
An estimated 63,000 home loan modifications were completed during the month, according to a report from Home Now. In addition, the company also assisted borrowers in completing nearly 38,000 short sales. Although this outcome is not ideal, a short sale can be less damaging to a borrower's financial safety and soundness than repossession.
"We have been tracking short sales for almost two years and we now have meaningful data that shows the impact of short sales on the housing market," said Home Now executive director Faith Schwartz.
Since the housing market collapse, the real estate industry has now helped approximately 6.43 million households find permanent solutions to avoid foreclosure, Schwartz added. Of these, an estimated 906,000 have been short sales. So far, Home Now has played a major role in this activity.
Meanwhile, nearly 45,000 of the modifications completed in May utilized proprietary initiatives, while 17,590 capitalized on the government's Home Affordable Modification Program.
However, despite the effort from Hope Now and other organizations, foreclosure starts increased to 204,000 in May from 177,000 the previous month.