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REOs Soar

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The number of completed foreclosures shot up more than 20 percent from December to January, a new industry report indicated. While subprime mortgages accounted for just over one-tenth of loans serviced in January — they accounted for more than half of homes repossessed.

Delinquency of at least 60 days was 5.43 percent on Jan. 31, according to a report today from HOPE NOW. Late payments rose from 5.23 percent on Dec. 31, 2008, and 3.17 percent on Jan. 31, 2008.

The findings were extrapolated from data on 38.4 million loans serviced by 26 HOPE NOW alliance members as of Jan. 31. The group serviced around 72 percent of all U.S. residential loans. Extrapolating the group’s total out to the entire industry, around 53,499 residential loans were outstanding on Jan. 31, the same as on Dec. 31, 2008, but fewer than the 54,103 on Dec. 31, 2007.

Included in the total were 32.7 million prime mortgages and 5.7 million subprime loans.

Prime mortgage delinquency was just 3.74 percent at the end of January, rising from 3.56 percent at the end of the prior month.

While subprime mortgages accounted for just 12 percent of loans serviced in January, they accounted for 40 percent of delinquent loans. Subprime late payments were 17.76 percent, up from 17.40 percent on Dec. 31.

Foreclosures were started on 217,000 loans during the most recent month, increasing from 203,000 in December and 169,000 in January 2008. Prime foreclosures started were 126,000, while there were 91,000 subprime foreclosures initiated.

Completed foreclosures climbed 21 percent to 68,000 during January from 56,000 a month earlier but were lower than 71,000 a year earlier. New subprime real estate owned filings were 38,000 and prime REOs were 30,000.

“It’s clear that the mortgage problem is still growing,” HOPE NOW Executive Director Faith Schwartz said in the statement.

But REOs have generally been trending lower since peaking at 91,752 in July 2008. However, a moratorium implemented by Fannie Mae and Freddie Mac on conforming loans through January as well as other privately and publicly implemented moratoria during the second half of last year may or may not have a lasting impact.

The industry reportedly completed 123,000 modifications in January, rising from 122,000 one month prior and 56,000 12 months prior. The latest month’s modifications included 89,000 on subprime loans and 35,000 on prime loans.

The group noted, however, that between 30 and 40 percent of modified loans become at least 90 days past due within six months after modification based on 2008 data. Modifications on loans backing private label securitizations accounted for 55 percent of January modifications, portfolio loan modifications represented 22 percent and government-sponsored enterprise loan modifications made up 17 percent. Ginnie Mae modifications were 3 percent of January activity.

Formal repayment plans were initiated on 125,000 mortgages during January, up from December’s 117,000 and the prior year’s 120,000. The latest month’s total reflected repayment plans initiated on 77,000 prime loans and 47,000 subprime loans.

While delinquency rose 4 percent from December, total workouts were also up 4 percent.

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