'Workouts' on U.S. Prime Mortgages Rise--Hope Now

Reuters (04/29/08); Yoon, Al
The HOPE NOW Alliance reports 502,520 mortgage workouts in the first quarter, up 6 percent from the 2007 fourth quarter and 26 percent from the third quarter. While workouts on prime loans surged 19 percent to 206,495 in the first quarter from 173,499 in the fourth quarter, the alliance reports that subprime workouts fell to 296,025 from 301,244. Friedman Billings Ramsey managing director Michael Youngblood attributes the jump in prime mortgage workouts to rapid price declines in the high-end real estate market, which affects prime jumbo loans. He notes, "We've moved past the period where borrowers were defaulting (only) as a function of poor underwriting. They are now due to more fundamental reasons such as job loss, or reduction in income." The Hope Now report also shows an increase in foreclosure sales to 121,212 during the first three months of 2008 from 91,653 during the last three months of 2007.