Foreclosures Up, But New Filings Slow

Completed foreclosures rose almost 17 percent in the second quarter of the year, with lenders reclaiming 106,000 properties from U.S. homeowners, according to official government figures released Wednesday.

The boost was attributed to the expiration of a number of private and government moratoriums, which postponed many foreclosures in the first quarter of the year. The monthly report was released jointly by the U.S. Office of Thrift Supervision and Office of the Comptroller of Currency.

The total number of foreclosures in process rose to 992,500, a 15.4 percent increase from the first quarter figure of 861,000. The new tally represents 2.9 percent of all outstanding mortgages, and is an increase of almost 80 percent from one year ago, when the tally stood at 553,000.

At the same time, the pace of newly initiated foreclosures slowed in the second quarter, declining 0.4 percent to just over 369,000 for the period of April through June. The report cited increased emphasis on loan modifications and other home retention actions by lenders, including those under the administration's Making Home Affordable program, for keeping the pace of new foreclosures flat.

The number of seriously delinquent mortgages, those 60 days or more past due, rose nearly 11 percent, to 1.8 million, up from 1.625 million in the second quarter. The tally represents more than 5 percent of the 33.8 million U.S. mortgages outstanding.

New home retention actions rise

Mortgage servicers initiated 3.4 times as many home retention actions as completed foreclosures in the second quarter of the year, the report said. New mortgage payment plans, the vast majority of them trial loan modifications under the Making Home Affordable program, were up 74 percent in the second quarter of the year, to 297,000. As a result of the trial loan modification program accounting for such a large percentage of new home retention efforts, newly finalized loan modifications were actually down for the quarter by 25 percent, to 142,000.

On the same day as the government report, an industry group released figures showing a sharp drop in new foreclosure actions and foreclosure sales in the month of August. The Hope Now Alliance reported that foreclosure starts dropped 21 percent, to 224,000, from July, with foreclosure sales down 16 percent, to 75,000. Even so, that would suggest a major increase in third quarter foreclosure starts once those figures are released, if the government report picks up the same trends.

The Hope Now report said that mortgage workout plans underway increased 28 percent in August, to 325,000. This included a 7 percent increase in loan modifications and a 38 percent increase in repayment plans. An estimated 360,000 trial loan modifications under the Making Home Affordable Plan were reported underway by the Treasury Department in early September.