While the news is full of climbing short sale rates and the “success” of the myriad federal programs in place to help homeowners deal with the housing crisis, a new report from the State Foreclosure Prevention Working Group (SFPWG), a group that compiles and analyzes information from state attorneys general and bank supervisors around the country, indicates that fully 60 percent of homeowners with “seriously delinquent” loans are electing to simply slide quietly into foreclosure rather than attempting loan modifications, short sales or forbearance[1].

The group is encouraging loan modification programs and other programs for loss mitigation to become actively involved in recruiting homeowners into aid programs. It could be that at this point in time, these programs, which are often perceived as simply postponing the inevitable, could actually help a lot more homeowners since principal write-downs and substantial, permanent payment reductions are finally working their way into the mainstream loan modification efforts. In fact, today’s loan modifications are, according to SFPWG, “40 to 50 percent less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008.”

If more homeowners do not start taking active steps toward loss mitigation, there could be hundreds of thousands more foreclosures in the coming months. Do you think that this foreclosure wave is the only way to really get past this problem, or do you think that loss mitigation is a good alternative for the market as a whole?

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[1]http://www.dsnews.com/articles/nearly-two-thirds-of-delinquent-mortgages-untouched-study-2010-08-24