US mortage lenders report profit despite home woes

* Thrift industry had 4th consecutive quarter of profits

* Industry still faces challenges from delinquent loans

* Number of problem thrifts continues to rise

* Profits were down slightly from previous quarter

By Dave Clarke

WASHINGTON, Aug 25 (Reuters) - The U.S. thrift industry reported $1.49 billion in profits for the second quarter, a slip from the previous quarter, but up from a $94 million loss a year ago.

It was the fourth consecutive profitable quarter for the industry, which reported a profit of $1.72 billion in the previous quarter.

The industry still faces challenges from delinquent loans, the Office of Thrift Supervision said on Wednesday.

The industry has put away $2.3 billion to guard against more loan losses as the housing market struggles, according to the OTS, which mostly regulates mortgage lenders.

On Wednesday, the Commerce Department said new single-family home sales fell in July by 12.4 percent to a 276,000 unit annual rate, the lowest since it began keeping track of the data in 1963. [ID:nN25121445]

"The thrift industry has clearly improved from the height of the recession but has certainly not recovered in full," OTS Acting Director John Bowman said. "The performance of the industry reflects the state of the overall economy and the stresses from high unemployment, weakness in the housing market and the spread of weakness to the commercial real estate market."

The number of problem institutions rose to 54 from 50 at the close of the previous quarter. That number stood at 40 a year ago.

The amount of troubled assets improved with OTS reporting that the percentage of noncurrent loans and repossessed assets fell to 3.21 percent of industry assets, from 3.28 percent in the previous quarter.

Under the new Dodd-Frank Act, which overhauled the rules governing Wall Street, the OTS is being shut down and most of its authorities transferred to the Office of Comptroller of the Currency. The Federal Reserve and the Federal Deposit Insurance Corp also will take on some of its responsibilities. The law gives the agencies a year to complete this transition.

The OTS came under fire in recent years for not providing enough supervision during the subprime mortgage crisis that rattled the economy. (Reporting by Dave Clarke; Editing by Robert MacMillan)