Cape Cod Banks Help Curb Number of Bank Repo Homes

by Donald Hanz on States

As the foreclosure crisis persists nationwide, Cape Cod banks have started cooperating with federal and state officials in the implementation of the Making Home Affordable Program and have helped curb the number of bank repo homes in the area.

According to residential real estate sales data in Massachusetts, the number of default and foreclosure notices sent to defaulting homeowners in June increased by a staggering 495 percent compared to foreclosure filings in June last year.

But the number of completed foreclosure deeds in June has gone down by 18 percent compared to completed foreclosure deeds in June last year. Foreclosure deeds refer to the final stage of the foreclosure process, turning properties into bank repo homes.

This big gap in the increase in number of foreclosure filings and number of bank repo homes meant that many troubled homeowners in Cape Cod have successfully modified or refinance their loans under the federal foreclosure prevention program.

Nancy Davison, operations vice president at Hyannis nonprofit agency Housing Assistance Corp., said the Obama administration’s Home Affordable Refinance Program and Home Affordable Modification Program is working in Massachusetts, especially in Cape Cod.

According to Davison, the number of completed foreclosure deeds posted in Barnstable County for the first 6 months of 2009 has dropped by 22 percent compared to the first 6 months of 2008. She said there were significantly fewer foreclosure deeds and bank repo homes in May this year compared to May 2008.

Davison credits the mortgage banks for the slowdown in foreclosures in the area. She said that there has been a significant change in the level of willingness of mortgage banks to work out loan modifications with responsible borrowers who have been struggling due to the recession.

She also credited the incentives provided to lenders and borrowers under the modification program.

At the start of the Making Home Affordable Program, Davison explained, only around 25 percent of homeowners counseled by her agency had been successful in working out loan modification and refinancing. Nowadays, she said, nearly 60 percent of borrowers being counseled have been getting affordable repayment schemes.

David Brennan, top executive at Cape Cod Five Cents Savings Bank, affirmed Davison’s statements. He said the provisions of the federal program launched this year are better than previous programs launched.

With everything considered, modifying a loan is better than foreclosing, according to Kevin Cuff, head of the Massachusetts Mortgage Bankers Association. Indeed, modifying a loan not only reduces banks’ nonperforming loans; it also means helping families prevent their houses from becoming bank repo homes.