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Bank Delinquency Better, Foreclosures Worse

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A new report on financial institutions indicated foreclosures deteriorated, though an improvement was reported in the rate of loan delinquency and the rate of re-defaults on loan modifications. Prime mortgages saw the biggest increase in repossessions.

Banks and thrifts serviced 33,895,628 residential loans for $5.947 trillion as of March 31, according to the Mortgage Metrics Report for the first-quarter 2010 jointly released today by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The figure was lower than 33,824,889 loans for $5.952 trillion three months earlier and 34,096,603 loans for $6.014 trillion 12 months earlier.

The collective servicing portfolio accounted for more than 64 percent of all U.S. residential loans outstanding as of March 31.

Subprime mortgages, those where credit scores fell below 620, accounted for 8 percent of the latest total, while Alt-A loans, those with scores between 620 and 659, made up 10 percent. Prime mortgage share was 68 percent, and credit scores were not identified in 14 percent of the loans.

Delinquency of at least 30 days declined to 12.7 percent from 13.6 percent in the fourth quarter. It was the first decline since the Mortgage Metrics Report debuted in June 2008. The decline was across all types of loans — prime, Alt-A and subprime.

The delinquency rate was 10.2 percent in the first-quarter 2009.

Late payments on government-insured mortgages improved to 14.6 percent from the fourth-quarter’s 17.3 percent. A year earlier, the rate was 13.8 percent.

Serious delinquency of at least 60 days, including 30-day bankruptcies, declined to 6.5 percent from 7.1 percent at the end of last year and 4.8 percent at the beginning of last year. Alt-A delinquency improved to 12.2 percent from the fourth quarter’s 13.5 percent, while the subprime rate fell to 20.0 percent from 22.4 percent. Prime delinquency improved to 4.1 percent from 4.2 percent

First-quarter newly initiated foreclosures were 370,536, rising from 312,520 during the final quarter of last year and 370,567 in the first-quarter 2009. New subprime foreclosures rose 25 percent from the fourth quarter to 79,308, and Alt-A filings increased 22 percent to 68,538. New filings on prime mortgages were 174,080, 18 percent higher.

Foreclosures in process rose to 3.5 percent from 3.2 percent in the fourth quarter.

Real-estate-owned filings were up 19 percent to 152,654. A year ago, the figure was 90,695.

Alt-A REOs were 26,765, 15 percent higher than the previous period. Subprime repossessions rose 13 percent to 27,661, and prime REOs reached 76,073 — 22 percent higher.

The foreclosure inventory swelled to 1,170,874 from the prior quarter’s 1,079,386 and the prior year’s 861,029. The subprime inventory rose from the fourth quarter’s 7.8 percent to 8.6 percent, while the Alt-A inventory increased to 6.0 percent from 5.6 percent. On prime mortgages, the rate rose to 2.4 percent from 2.3 percent.

While the two regulators noted that the sustainability of modifications continued to improve — with more than 87 percent of loan modifications reducing payments and nearly 55 percent reducing payments by 20 percent or more — more than half of all modifications that were 12 months old were 60 days past due. But the report indicated that more recent vintages are performing better — with 48 percent of 2009 modifications delinquent as of March 31 compared to 73 percent for 2008.

“As shown before, modifications that reduce the borrower’s monthly principal and interest payments consistently perform better than modifications with the payment unchanged or increased,” the report stated.

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