Foreclosures Up, Loan Modifications Down in 3Q

December 31, 2010 (Shirley Allen)
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In a report released by the Treasury Department’s Office of the Comptroller of the Currency and Office of Thrift Supervision, the number of delinquent borrowers who started U.S. home loan modifications declined in the third quarter as fewer people qualified for easier payment terms.

Loan servicers started 470,321 modification or payment plans in the three months ended Sept. 30, down 17 percent from the previous quarter and 32 percent from a year earlier according to Third Quarter Mortgage Metrics Report released on Wednesday.

Additionally, the report revealed that nearly 187,000 homes were lost to foreclosure in the third quarter of 2010, up 14.7 percent from the second quarter and an annual increase of 57.5 percent from the third quarter of 2009. Total foreclosure activity was up 4.5 percent from the previous quarter, with 1.2 million homes in the foreclosure process, reflecting a 10.1 percent annual increase.

Add in the short sales, in which a bank accepts less than a mortgage balance, together with the foreclosures, and the number rose to 244,840 in the third quarter, up 63 percent from a year earlier and 11 percent from the previous three months

At the same time, the overall mortgage picture remains stable, with 87.4 percent of all mortgages current and performing, unchanged from the second quarter and slightly higher than one year ago.

Early stage delinquencies, those 30-59 days past due, increased for the second consecutive quarter, rising by 4.3 percent. However, at 3.2 percent of the total mortgage portfolio, they remain within the range of 2.8-3.4 percent they have occupied since the last quarter of 2008.

Serious mortgage delinquencies, those more than 60 days past due or to bankrupt borrowers, fell by 6.4 percent, to 1.9 million loans, primarily due to these mortgages moving into foreclosure, rather than borrowers becoming current on their loans. This is the third consecutive quarterly decline and its lowest mark in five quarters.

The Treasury Department’s Mortgage Metrics Report examines data on 33.3 million home loans valued at about $6 trillion, representing 64 percent of all first-lien mortgages in the country.

Tags: foreclosures, loan modifications, treasury department, mortgage metrics, payment plans, current mortgages, delinquencies, borrowers, mortgage loans