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Th e M Rep o RT | 43 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING the latest nearly two million Homeowners Offered mortgage solutions in 2014 Loan modifications ticked up at the end of the year. m ore than 489,000 permanent home loan modifications were offered to homeowners last year, according to HOPE NOW's 2014 loan modification data released last month. HOPE NOW is a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers, and non- profit counselors. The data showed more than 1.88 million homeowners received loan modifications, short sales, deeds in lieu, or some other workout plan as a mortgage solution. Of the loan modifications in 2014, 352,000 were proprietary and 136,898 were completed under the government's Home Affordable Modification Program (HAMP). The mortgage industry has completed about 23.2 million non- foreclosure solutions for homebuy- ers since 2007. Mortgage servicers have completed more than 7.3 million total permanent loan modifications in that same time period. Approximately 5.9 million of those modifications were via proprietary programs, and more than 1.4 million were completed under HAMP. "Nearly half a million families were helped with loan modifica- tions in 2014. This is a significant number and shows the strong commitment from HOPE NOW members," Executive Director of HOPE NOW Eric Selk said. "The industry has a multitude of solutions at their disposal, both long term and short term, and mortgage services work hard to put homeowners in solutions that are sustainable and realistic." About 1.57 million short sales have occurred since December 2009, while short sales for 2014 were approximately 130,000. Deeds in lieu of foreclosure for the year totaled 28,000, for a life- to-date total of 127,000. Year-end data showed a decline in the number of loan modifications completed, compared to 2013. Loan modifications decreased 36 percent from 767,000 in 2013 to 489,000 in 2014. Completed loan modifications decreased 4 percent from 113,000 in the third quarter of 2014 to 108,000 in the fourth quarter of 2014. Loan modifica- tions increased 12 percent from 33,000 in November 2014 to 37,000 in December 2014. The Federal Housing Finance Agency (FHFA) is still refinanc- ing plenty of loans through Home Affordable Refinance Program (HARP)—in fact, more HARP refinances were done in December than in any other month of 2014— but HARP refinances are signifi- cantly down from a year ago, even if FHFA suggests it has many more potential customers out there. In a report released February 20, FHFA found that with 30-year fixed mortgage rates averaging about 3.86 percent, the number of loans refinanced through 2014 made up 14 percent of total refi- nances nationwide last year, and 9 percent of all refinances in Q 4. The numbers might sound sig- nificant, but they are dramatically lower than where they were at the end of 2013. In the fourth quarter of 2014, FHFA approved 37,397 refi- nances through HARP. In the first quarter, it approved roughly 77,000, which itself was a sharp drop from the 115,000 HARP refinances recorded in Q 4 of 2013. Throughout 2013, FHFA averaged about 275,000 transac- tions per quarter, the number of which steadily declined as the year progressed. The same pattern emerged in 2014, chart- ing a further dropoff in HARP refinances—a phenomenon for which FHFA has yet to offer a solid explanation. In September, CoreLogic, looking at the steady erosion of HARP refinances, offered a possible explanation by saying that the national negative equity rate was down to 10.7 percent for all mortgaged homes at the time. FHFA's data does back up this idea: Through December, 27 percent of HARP refinances had a loan-to-value ratio of greater than 105 percent—down from 40 percent through all of 2013. What FHFA does come out and say is that it wants more peo- ple to take advantage of HARP refinancing. FHFA estimates as of the third quarter of 2014, more than 652,000 borrowers nation- wide "have a strong financial rea- son to refinance through HARP." These are borrowers who meet basic HARP eligibility require- ments, have a remaining mortgage balance of at least $50,000 and a remaining term of at least 10 years, with an interest rate at least 1.5 percent higher than current market rates. Refinancing through HARP, FHFA states, can save these borrowers $200 a month on average. The savings are more than a crib note for financial literacy. FHFA has, since looking at the results of HARP refinances a few years ago, been beating the same drum when it comes to the main benefit of the program—borrowers who go through HARP are less likely to fall into delinquency. Borrowers in certain states are apparently listening. HARP refinances in Georgia and Florida, for example, comprised roughly 29 percent of all refinances in those states last year. Nevada and Michigan came closely behind, at 26 and 24 percent, respectively.