New Foreclosures Down, Mortgage Performance Steady
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- Kirk Haverkamp | September 25, 2010
New foreclosures initiated in the second quarter of the year were at their lowest rate since the final months of 2008, according to a new government report issued today.
Mortgage servicers initiated 292,000 new foreclosure actions in the second quarter of the year, lower than any of the previous five quarters. Meanwhile, serious mortgage delinquencies of 60 days or more were at their lowest level of the past 12 months, although higher from the second quarter of 2009.
The quarterly Mortgage Metrics Report, issued by the Office of the Comptroller of the Currency and Office of Thrift Supervision, provides a snapshot of how U.S. mortgages performed during the quarter, including information on foreclosure rates and loan modification performance.
Rate of performing mortgages unchanged
The report did not show any clear trends, with some of the data showing improvements while other indicators declined or remained unchanged. Among the key findings, the number of performing mortgages remained unchanged, with 87.7 percent of homeowners with mortgages current on their monthly payments, same as the first quarter of the year.
Homes lost to foreclosure increased 7 percent during the quarter to 163,000, a 54 percent increase over th same period last year as lenders continue to work through a backlog of seriously delinquent loans and previously initiated foreclosures already in the system. However, the declining rates of delinquency and new foreclosures indicate that fewer properties are entering the process.
There was an increase in short-term delinquencies of 30-59 days during the quarter, but this was attributed to seasonal factors. Early stage delinquencies were up for all types of mortgages compared to the first quarter, but were down from one year earlier for most types, include prime and subprime loans.
New loan modifications increase
Approximately 273,000 new mortgage loan modifications were implemented during the quarter, an 18 percent increase from the first quarter of the year. These included 65,000 new trial modifications under the Home Affordable Modification Program (HAMP) of the government’s Making Home Affordable program.
More than 90 percent of loan modifications reduced homeowner’s mortgage payments, although monthly savings under HAMP were about twice as large as those under proprietary modifications performed by lenders. Homeowners with HAMP modifications reduced their monthly payments by an average of $608, compared to $307 through private modifications.
Recently performed loan modifications appear to be having a more positive impact than those performed earlier during the mortgage crisis, with fewer loans falling back into delinquency six months after modification. Three months after the loan was modified, 11 percent of the mortgages modified in 2010 were again seriously delinquent, compared to 20 percent for loans modified in 2009 and 32 percent for mortgage modifications done in 2008.
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