Foreclosures Reaching Record Highs – Again

Despite assurances from the Government that there are safeguards in place, foreclosures continue to rise. Even the recent housing scorecard released in December admitted that “much work remains to be done,”  and the Q3 news is generally not good for those under water.

According to  The Republican, Springfield, Mass reported the highest number of completed mortgage foreclosures of any city for the first 11 months of the year, with 575 foreclosures deeds filed, up almost 24% from 2009, although the number of foreclosure starts decreased thanks to a moratorium in the last few months of the year. Whether the HUD “Emergency Homeowner Loan Program,” that is due to begin in March will have an effect is still up in the air – if it is as well implemented as previous initiatives – unlikely.

According to the Office of the Comptroller of the Currency (Ensuring a Safe and Sound National Banking System for all Americans), the number of new foreclosures increased to more than 382,000 in Q3 2010. This is the full release:

The credit quality of first-lien mortgages serviced by large national banks and thrifts remained steady during the third quarter of 2010, but the pace of foreclosures increased, according to a report released today.

The quarterly report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision showed that 87.4 percent of the 33.3 million loans in the portfolio were current and performing at the end of the third quarter of 2010, a level unchanged from the previous quarter.

Although the percentage of seriously delinquent mortgages (60 or more days delinquent or delinquent loans to bankrupt borrowers) decreased by 6.4 percent from the previous quarter, the percentage of mortgages that were 30 to 59 days delinquent increased by 4.3 percent.

Foreclosures increased during the third quarter, reflecting the large number of seriously delinquent borrowers moving through the foreclosure process after servicers exhausted home retention options.

The number of new foreclosures increased to more than 382,000—31.2 percent more than in the previous quarter and 3.7 percent more than a year earlier.  The number of foreclosures in process increased to 1.2 million—4.5 percent more than in the previous quarter and 10.1 percent more than a year earlier.  The number of completed foreclosures also increased to nearly 187,000—14.7 percent more than in the previous quarter and 57.5 percent more than a year earlier.

Although foreclosure activity increased during the quarter, servicers reported almost twice as many home retention actions as completed home forfeiture actions.  Servicers implemented 470,321 home retention actions—loan modifications, trial period plans, and shorter term payment plans—compared with 244,840 home forfeiture actions.

During the past five quarters, servicers initiated nearly 3 million home retention actions—about 987,000 modifications, 1.3 million trial period plans, and 673,000 payment plans.  Home retention actions declined 17 percent from the prior quarter, driven by decreases in modifications and trial period plans under the Home Affordable Modification Program (HAMP).

For the first time, the report provided mortgage modification data by state.  Nine new tables of information include the number and percentage of HAMP modifications and other modifications in each state during the third quarter, the number and percentage of each type of action included in modifications, and the number and percentage of modifications broken down by how the modifications affected borrowers’ monthly principal and interest payments.

Other key findings of the report included:

  • Modifications that significantly reduced borrowers’ monthly payments continued to perform better than modifications that increased payments or left them unchanged.  More than 88 percent of modifications implemented during the third quarter decreased monthly principal and interest payments.  More than 54 percent of those modifications reduced payments by 20 percent or more.  On average, modifications during the third quarter reduced borrowers’ monthly principal and interest payments by $396.  HAMP modifications reduced payments by an average of $585, compared with a payment reduction of $332 from other modifications.
  • More recent modifications that emphasized sustainability and affordability continued to outperform modifications implemented earlier.  At six months after modification, 20.2 percent of the modifications made in the fourth quarter of 2009 were seriously delinquent, compared with 33.5 percent of modifications made during the second quarter of 2009.

The report covers about 64 percent of all first-lien mortgages in the country, worth $5.8 trillion in outstanding balances.  The complete report can be downloaded here

The figures are actually quite shocking when one considers not only the sheer volumes of foreclosures, but the fact that the bulk of new foreclosures and foreclosures in process are now “prime” mortgages, not the poison pill “Alt-A” or “sub-primes.”

In amongst a staggering amount of statistics and figures, a few things stand out. Certainly the backlog continues to grow, throwing extreme doubt on the balance sheets of any banks holding large amounts of mortgages and the problem seems to be growing, not shrinking.

Sources -

About Mark Knowles

I am a long time professional blogger and SEO specialist in the real estate industry. I can be contacted here: mpk [at] bankproperties.com and also here:
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