Update on Foreclosure Pipeline

A recent report by the leading federal bank regulator, the Office of the Comptroller of the Currency ("OCC") reveals some interesting trends in the 2nd quarter of 2011.  The OCC's mortgage performance report covers about 63 percent of all first-lien mortgages in the United States, worth $5.7 trillion in outstanding balances. 

In a nutshell, foreclosures are continuing to increase, although at a seemingly slower rate as mortgage servicers pursue alternatives to foreclosure.  Unfortunately, nearly half of the loans modified since 2008 have subsequently gone into delinquency.  Looking ahead, the OCC anticipates an increase in REOs coming onto the market as stalled foreclosures work their way through the system.

Here's a look at the numbers:

• Increase in early stage (30-59 days) delinquencies rose by .04% from the previous quarter.  This increase is attributed to the sluggish economy and continued high unemployment, as well as seasonal variations.
• The number of late stage delinquencies (60+ days) also increased slightly in the 2nd quarter after having decreased in each of the previous five quarters.
• Completed foreclosures increased by 1.2% from the previous quarter were up 27% from the quarter prior to that (Q4 2010).
• A brighter note is that newly initiated foreclosures have declined for the past three straight quarters as lenders seek alternatives to foreclosure for delinquent borrowers:
• There were 56,403 new short sales reported during Q2, up 12% from the previous quarter
• Mortgage servicers implemented 456,397 home retention actions, including loan modifications, trial-period plans, and payment plans durign the 2nd quarter of 2011.
• Of loans modified since the beginning of 2008, nearly half – 48.7 percent – have since gone delinquent