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Foreclosure decrease may be due to mortgage modifications

The number of foreclosures filed by Florida homeowners has decreased within the last year. And while many might look at this as a good sign of the economic times, others are pointing to the decrease being in part to banks changing their practices, and more homeowners actually qualifying for loan modifications.

According to RealtyTrac, Florida's overall foreclosure rate decreased 65 percent last month. However, the company is predicting that later this year the number of foreclosures will start to raise once again as mortgage lenders sort out some of the industry's previously seen issues, like robo-signing.

When looking at the entire country, for the second month in a row, Florida also managed to not post foreclosure numbers within the highest of the top 20 metro areas. When looking at this time one year ago, Florida cities actually accounted for nine of the top 20.

Nationwide there was also 27 percent decrease in the number of foreclosures filed, which is the biggest drop since 2005 when RealtyTrac first started to track foreclosure numbers from state to state.

However, aside from a change in bank procedures, some sources claim that the federal Making Home Affordable program may also be another contributor to the overall decrease in foreclosures throughout the state of Florida, and also the rest of the country. The program encourages banks and other mortgage lenders to provide loan modifications to homeowners, which can help to prevent foreclosures.

Mortgage modification programs - whether through the federal program or obtained outside of the program - can help homeowners avoid foreclosure by either offering lower monthly payments or allowing them to catch up on previously missed payments.

Source: The Palm Beach Post, "Area sees big drop in foreclosures, but it's likely a fleeting reprieve," Kimberly Miller, 10 March 2011

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