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New Foreclosures Fall But Delinquency Higher

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A big decline in new foreclosures started on prime mortgages during August appeared to be supported by a large increase in prime workouts. Delinquency, however, was worse — though mobile home delinquency improved.

In August, residential delinquency of at least 60 days climbed to 6.28 percent, according to data released this week by HOPE NOW. It was the fifth consecutive monthly rise.

Late payments rose from 5.90 percent in July and 3.82 percent during August 2008.

HOPE NOW’s findings were based on data from 37.8 million loans — including 32.3 million prime and 5.5 million subprime mortgages — submitted by 26 member servicers. The group is responsible for servicing 72 percent of U.S. mortgages. By extrapolating the figures out to the entire industry, HOPE NOW determined that there were approximately 52,613,000 U.S. home loans outstanding.

Subprime delinquency increased to 20.26 percent from 19.30 percent in July, and prime delinquency rose to 4.55 percent from 4.24 percent.

The American Bankers Association reported today that home-equity loan delinquency of at least 30 days reached a record 4.01 percent in the second quarter, increasing from 3.52 percent in the first quarter. Home-equity line-of-credit delinquency rose from 1.89 percent to a record 1.92 percent.

But ABA noted that mobile home delinquency decreased to 3.53 percent from the first quarter’s 3.70 percent.

HOPE NOW’s report indicated that 224,000 foreclosures were started in August, falling from 284,000 the prior month but climbing from 189,000 the prior year. Subprime foreclosures started fell to 65,000 from July’s 72,000, and prime foreclosures tumbled to 159,000 from 212,000.

So far this year, foreclosures were started on 1,981,400 properties.

Completed foreclosures also fell — to 75,000 in August from 89,000 the previous month and 86,000 a year earlier. Prime REOs dropped to 52,000 from 59,000 in July, and subprime repossessions declined to 24,000 from 30,000.

Year-to-date Aug. 31, 601,382 foreclosures have completed.

Workout plans were 325,842, jumping from July’s 253,673 and August 2008’s 188,931. The rise was fueled by prime workout plans — which leapt to 224,153 from 150,955 in July. Subprime workouts declined, however, to 101,688 from 102,678.

Year-to-date workouts totaled 2,096,988.

“Our data suggests a correlation between the drop in foreclosures and the increase in workout solutions to help at-risk borrowers,” HOPE NOW Executive Director Faith Schwartz said in a statement.

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