New foreclosure filings fell during the latest quarter, but delinquency, foreclosures-in-process and real estate owned filings rose, according to new government data. An even more troubling statistic — a deterioration in re-defaults on modified loans — was led by investor-owned loans and subprime mortgages.
Delinquency of at least 30 days was 6.74 percent in the third quarter, according to a joint report released today from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Delinquency jumped from 5.79 percent in the second quarter.
The report was based on data from 34.6 million first mortgages for $6.117 trillion submitted by Bank of America, Citibank, First Horizon, HSBC, JPMorgan Chase, National City, US Bank, Wachovia and Wells Fargo. Combined servicing portfolios for the nine institutions accounted for more than 60 percent of outstanding U.S. mortgages.
Around two-thirds of outstanding portfolios were prime mortgages, while 10 percent were Alt-A and 9 percent were subprime. The regulators indicated that around 88 percent of the aggregate servicing portfolios were owned by other investors.
Foreclosures in process during the third quarter were 1.78 percent, rising from 1.59 percent three months earlier. The number of loans in the foreclosure process ended the third quarter at 617,642.
New foreclosure filings of 281,298 fell 3 percent from the prior quarter. So far this year, 850,148 new foreclosures have been filed.
Third-quarter repossessions amounted to 141,835, rising from 127,345 in the second quarter.
Third-quarter foreclosure prevention actions were 287,755, including 133,106 modifications and 154,649 payment plans. During the second quarter, 253,635 foreclosures were prevented, including 114,439 modifications and 139,186 payment plans.
The report indicated that 55 percent of loans modified during the first quarter were at least 30 days delinquent after six months. The 60-day delinquency rate after six months on the same batch of loans was 37 percent.
“One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months,” Comptroller of the Currency John C. Dugan said in the announcement.
Re-defaults were highest on subprime loans, which had a 61 percent 30-day delinquency rate six months after modifying.
But the report also indicated that delinquency on modified loans owned by banks and thrifts was 51 percent — slightly better than overall numbers. The findings suggest servicers have greater flexibility to modify loans in more sustainable ways when they own the mortgages.
Loans owned by private investors saw a 30-day delinquency rate of 61 percent six months after modification. Loans owned by Fannie Mae and Freddie Mac had 30-day delinquency of around 57 percent within six months.
Related:
Over Half of Modifications Re-Default
More than half of borrowers default after modifying their loans, according to new government data.
