Home foreclosures jump in third quarter
(Reuters) - The number of new home foreclosures jumped by more than 21 percent in the third quarter from the second as banks moved more aggressively after a pause to review how they deal with troubled borrowers, according to a report released by a bank regulator on Wednesday.
In the final months of 2010 some big lenders, including Bank of America Corp and Wells Fargo, suspended foreclosure proceedings as they responded to criticism over shoddy paperwork used to support foreclosures.
With those reviews completed, the pace of foreclosures is picking up.
The report, by the Office of the Comptroller of the Currency (OCC), said that the large increase in new foreclosures also occurred because banks have "exhausted alternatives to foreclosure for the large inventory of seriously delinquent mortgages working through" the system.
With both the economy and the housing market showing some signs of improvement, the number of new foreclosures in the third quarter was 11.8 percent less than a year ago.
An OCC official said the third quarter percentage increase brought the total number of new foreclosures back to the historically high level that is expected given the amount of seriously delinquent loans in the system.
The number of new foreclosures in the third quarter was 347,726, about the same as before some large banks hit the pause button on foreclosures beginning late last year.
Bruce Krueger, a mortgage official at the OCC, said he expects the amount of new foreclosures to remain at or near the third quarter level for at least the next few quarters.
"I think what you are seeing is what would be considered a more expected level, a more normalized level and I would expect that to continue going forward so long as we have this pipeline of serious delinquent mortgages out there," Krueger told reporters on a conference call.
The OCC defines a seriously delinquent mortgage as a loan that is more than 60 days past due or a loan to a bankrupt borrower that is more than 30 days past due.
In the third quarter there were close to 1.6 million loans that fell into this category, which was about 1 percent less than the previous quarter and 16 percent less than a year ago.
Other data released this week shows the depressed housing sector starting to show signs of strength heading into 2012, with the strongest evidence coming from new housing starts for November.
An unexpected 9.3 percent gain to a 685,000 annual rate was the highest level of new-home construction in 19 months. Building permits issued for new houses and apartments climbed 5.7 percent to a more than one-year high.
Sales of previously owned U.S. homes increased 4 percent in November, to an annual rate of 4.42 million units, although downward revisions of data for the last four years showed the housing market recession was deeper than previously thought, according to data released on Wednesday by the National Association of Realtors.
Wednesday's OCC report showed that the number of borrowers making mortgage payments on time in the third quarter remained almost unchanged from the previous quarter.
The OCC said that of the 32.4 million loans covered by the report, 88 percent were considered current and performing.
The OCC Mortgage Metrics Report provides performance data on first-lien residential mortgages serviced by national banks and federally regulated thrifts. The mortgages in this portfolio make up 62 percent of all mortgages outstanding in the United States.
The slowdown in foreclosures earlier this year coincided with banks coming under greater scrutiny both from state attorneys general and federal regulators.
In April, several large banks entered into a settlement with the OCC, the Federal Reserve and the now defunct Office of Thrift Supervision on steps to improve their foreclosure processes, such as providing borrowers with a single point of contact for questions.
States and the Justice Department are currently trying to negotiate a settlement with Bank of America, JPMorgan Chase & Co, Citigroup Inc, Wells Fargo and Ally Financial.
(Reporting By Dave Clarke and Margaret Chadbourn; Editing by Steve Orlofsky and Tim Dobbyn)
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