The Federal Housing Finance Agency (FHFA) released data on mortgage delinquencies and foreclosures on Tuesday. As reported by Bloomberg and by Housing Wire, among others, one of the most reported statistics covered the top 5 reasons for mortgage default (RFD).

The FHFA published the top 5 reasons for default.

This is not a list you would get if the main reasons for default were based on house-flipping speculation gone bad (although "excessive obligations" covers many sins).

The data also show that the foreclosure moratorium was obeyed, and completed foreclosure sales dropped from over 17,000 per month to 3,400 from October to January. In that same time period, the underlying pressures borrowers are facing in trying to keep current on their mortgages did not abate. 60+ days delinquencies continue to rise from 600,000 in October to more than double that number through January.

As Mish's Global Economic Trend Analysis said, "successful loss mitigation is increasing BUT in January only 9k loans were successfully modified. That would have to increase 10 fold to make a dent in the upcoming foreclosure wave…The multi-month foreclosure suspension that ended on March 31st came at the same time as the new GSE loss mitigation initiative -- but with a 400k increase in distressed loans over the past 2 months and a recent record of 9k mods per month, the broken dam has a lot of water coming over it."

Overture's solution for creating intelligent, transparent, effective loan workouts is successful in helping borrowers whose income is constrained or who have too much debt. It cleanly and effectively shows affordable rate and/or term modifications that borrowers and servicers can live with.

Additionally, servicers using our solution can do better than what the government programs allow (38% with a term adjustment, 31% with term, rate and some principal forgiveness). Mozart for Special Servicing also calculates, for the 8.1% who gave unemployment as the RFD, short sale, deed in lieu, charge-off or foreclosure process eligibility and cost, compared economically, side-by-side with loan modifications and offered to the processor to consider.

With the enormous growth in delinquencies, unless servicers do something different, many borrowers who should be considered for less draconian outcomes will end up in foreclosure because nobody has the time, skill-sets, or data to find the better solution. If you want to participate in a better way, please get in touch.

[Workout] delayed, is [Workout] denied... with apologies to William Gladstone