Foreclosures Continued To Climb In 1Q At US Thrifts -Report
Thursday July 3rd, 2008 / 21h57
By Michael R. Crittenden Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- New mortgage foreclosures at U.S. thrift institutions continued to climb during the first quarter, led by a deterioration in prime and Alt-A loans that are typically taken out by less risky borrowers. The Office of Thrift Supervision, in a report released Thursday on mortgage data from the five thrifts with the largest mortgage servicing portfolios, found that new foreclosures climbed to 46,249 in March from 35,780 in January. The agency attributed the increase to growing numbers of new foreclosures among Alt-A and prime loans, the latter of which represented nearly half of the new foreclosures in March. Lenders responded to the growing number of foreclosures with an increase in efforts to help struggling borrowers. The study, which covered 11.4 million first-lien mortgages worth about $2.3 trillion, found that there were about 22,300 loss mitigation actions by the industry in March, up from roughly 12,500 new modifications and payment plans in January. Of note, the study found that lenders are increasingly relying on loan modifications and not new payment plans when attempting to prevent a foreclosure. Voluntary industry efforts to help borrowers have come under fire, in part because of a reluctance to modify the terms of unaffordable loans. The OTS found, however, that loan modifications outnumbered payment plans, 2.5 to one, during March. Still, the OTS data suggest lenders' efforts to prevent foreclosures may not be keeping up with new foreclosure filings. For all loans, new mitigation actions as a percentage of new foreclosures was 48.31% at the end of the first quarter - a far cry from the 100% figure that would mean there were as many new mitigation attempts as new foreclosures. The agency found that the number of current and performing loans in the five servicers' portfolios remained stable around 92% during the first quarter, though the number of foreclosures in process did climb to 1.73% from 1.49%. The highest level of delinquencies were concentrated in loans that were between 30 and 59 days past due, while the number of loans that were at least 90 days delinquent remained constant at 1.74% of the portfolio. The total number of foreclosures in process in the portfolio was 197,260 at the end of March, 42% of which were prime loans. That's roughly four times the 49,000 loss mitigation actions that had been implemented at the end of the first quarter. The OTS downplayed the predictive nature of its report, saying it would be "inappropriate" to draw conclusions about the overall condition of the U.S. mortgage market based on its data. The agency said the five servicers involved in the study service a smaller percentage of subprime loans and are geographically concentrated in the West and Southeast, making for an non-representative sample. The five thrifts surveyed includes units of Washington Mutual Inc. (WM), Countrywide Financial Corp., IndyMac, Merrill Lynch Inc. (MER), and Wachovia Corp.(WB). -By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=YR4uBIqxai%2BnNiEwRngPJQ%3D%3D. You can use this link on the day this article is published and the following day.
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