English: Foreclosure Sign, Mortgage Crisis

By Todd Sullivan of Value Plays……

Mortgage delinquencies stabilized in the third quarter, though new foreclosures jumped 21.1% from last quarter according to the Office of the Comptroller of the Currency.

The OCC said mortgage servicers “lifted voluntarily moratoria implemented in late 2010,” when the robo-signing controversy initially came to light. Newly initiated foreclosures, however, declined 11.8% from third quarter 2010.

Foreclosures in process made up about 4.1%, or 1.3 million loans, of the overall mortgage portfolio measured by the OCC. That’s up 0.5% from the second quarter and 7.6% from a year earlier.

First-lien mortgages current and performing changed little in the third quarter, down 0.1 percentage points to 88% of all loans in the OCC portfolio. Those loans made up about 87.5% of the portfolio a year ago.

Modifications declined 8.5% from the second quarter to about 138,000. That includes a 23% drop in mods through the Home Affordable Modification Program.

Third-quarter modifications reduced monthly principal and interest payments by 24.4%, or $382. HAMP mods cut payments by 35.1%, or $567.

The OCC report includes about 62%, or 32.4 million, of all first-lien mortgages in the U.S. worth $5.6 trillion in outstanding balances.

So, we have current loan performance unchanged (at acceptable levels) and a surge in foreclosure activity. Seeing that dearth of inventory from yesterday’s housing revisions, this is not a surprise. Inventories are back to 2005 levels despite some 13M more people ion the US needing a place to live. Pretty simple math really…

More than that this is VERY good news from banks as they are able to free the albatross hanging from their neck. They are increasing foreclosure because they are now able to unload these properties. This is why you see consistent “home sales up but prices down” headlines. REO’s will lowers the market price when they sell as they do so for a discount, but the fact they continue to sell at an increasing rate means more buyers are coming out for them. Good news for $BAC$WFC$C$JPM and the other banks

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