California Loans News

The figures for September revealed that the First Federal Bank of California has modified more than $1.4 billion of mortgages. This resulted to estimated 3,000 borrowers who have retained possession of their home. “The workouts continue to perform better than those of banks nationally, fulfilling the Obama administration’s goal for lenders to provide affordable and sustainable mortgages to borrowers who face hardship,” the Bank report stated.

Last month’s period was the third most active month for loan modifications since the Bank launched its program. During the third quarter, there were approximately 900 mortgages modified, amounting to more or less $442 million. And during September alone, more than 300 loan modifications have transpired. The bulk of the modification work was done with the bank’s adjustable-rate mortgage (ARM) loan portfolio.

The First Federal Bank of California also showed that its redefaults rates were higher than the national average. As of last year’s first quarter, 28.3 percent of the loans modified were at least 30 days delinquents a year after they were modified. According to the September report of the Office of the Comptroller of the Currency and Office of Thrift Supervision, the figure is 65.9 percent for national banks and federally regulated thrifts.

The Bank’s report said, “Refinements made to the loan modification program, coupled with the flexibility that comes with modifying portfolio loans, enabled [the bank] to improve its modification success rate. [We also] took proactive measures, offering modifications before borrowers defaulted on their payments.”

More than 90 percent of the loans modified by the bank were current when these entered the program. Also, the Bank converted option-ARMs loans into fixed-rate mortgages up to 10 years. The negative-amortization provisions in these were eliminated. The foreclosure loans also benefited. These decreased by 38 percent, from $456.2 million to $281.8 million, as of June 30.

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