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Serious U.S. mortgage delinquencies up 20 percent
WASHINGTON |
WASHINGTON (Reuters) - Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, as the percentage of current and performing mortgages fell for the sixth consecutive quarter, banking regulators said on Monday.
The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are part of the Treasury Department, covered about two-thirds of all U.S. mortgages.
It found 3.6 percent of prime mortgages -- those made to the most credit-worthy borrowers -- were seriously delinquent in the third quarter. That was more than double the year-ago quarter and up nearly 20 percent from the 2009 second quarter.
The report defined "serious delinquencies" as those loans 60 days or more past due and loans to delinquent bankrupt borrowers.
Big U.S. banks and thrifts carried out 2.4 million home loan modifications, trial period plans or payment plans in the quarter, spurred mostly by a government plan offered by President Barack Obama, according to the report.
Most came from the government's Home Affordable Modification Program. Mortgage servicers carried out 274,000 trial plans in the third quarter, up 240 percent from the second quarter when the plan was launched.
But only 1 percent of those had been converted to permanent modifications as of September 30, 2009, the report said.
A major cause of this disconnect is that loan servicers are finding that many borrowers who initially appear to qualify for the program do not, according to the report.
The Treasury Department has been pressuring lenders and mortgage servicers to do more to ease the harm from rising foreclosures.
Loan modifications made outside the new aid program fell in the third quarter by nearly 8 percent, the report said.
(Reporting by Kim Dixon, editing by Matthew Lewis)
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We now are finding that the majority of modification being rejected are NOT the sub-prime loans, but instead the Alt-A and “A” paper borrower, impacted by the overall economic crisis, who lives in an area rife with foreclosures and short sales… Anyone who believes that they have not been impacted by the crisis is fooling themselves… 100% of the home values have suffered. Current underwriting and HAMP guidelines make it virtually impossible for the tens of millions of the self-employed to qualify for any sort of relief. i.e., I recently had a client turned down for a refinance… 13% Loan-to Value, 803 mid credit score, “7-figure” cash reserves… turned down because she was self-employed, and her tax returns “didn’t work”… The HVCC appraisal regulations are equally at fault (compliment!)… on a recent transaction, a purchase with the home in a San Francisco suburb…the lender ordered through the new process… the firm then ordered the appraisal, not from any of the several dozen well qualified appraiser within 10 miles of the property, but from an appraiser who lives in Red Bluff, some 200 plus miles from the home!!! This appraiser, with zero local knowledge proceeds to “value?” the home $120,000 below the sales price… MOREOVER, this is all too COMMON… Treasury and congress establish onerous guidelines, interpreted by the underwriters as cast in stone, making it difficult if not impossible for the public to comply… politically… “We tried”, knowing all too well that there is no relief for the public… Lenders are crying that they will lose money… but the cold facts are that with a rate and term refinance they only give up profit, not principal… In the instance of a loan reduction, they refuse to make the common sense business decision of taking the lower loss through modification. Rarely does a lender get creative at all… split the loan balance, and defer a portion to a later time when the home is either refinanced or sold… Keeping people in their homes is the only real answer to the entire economic crisis. The entire process must be simplified, with any mortgage holder which has received ANY federal funding being REQUIRED to offer” no qualifying loan modification. Each time there is a foreclosure or short sale; there is a corresponding loss in local and state real estate tax revenue, which in many states is compounded by lowered property reassessments of every home within the county!
Lastly, the cause of the now all to certain to occur commercial real estate crash is the residential crisis. People in the throws of losing their homes do not buy good and services… business fail (many financed by CIT)… bringing in zero rents… already there are shopping center defaults… numerous hotels have been foreclosed upon…
Thus…
It’s the foreclosures stupid… it’s the foreclosures”…
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