Slowly Emerging from the Dark: Foreclosures Dip Dramatically

It wasn’t that long ago that the preponderance of homes sales were from foreclosures or properties in default. The United States was mired in the worst recession since the Great Depression and scandals in the banking industry precipitated the morass on the housing market. It was, to state the obvious, one of the bleakest economic periods in our nation’s history.

We now are slowly emerging from this dark time as the percentage of mortgages that were in the process of foreclosure at the end of the first quarter of 2014 was only 1.8 percent, the lowest level since September 2008. In fact, the percentage of mortgages that were seriously delinquent decreased a whopping 22.4 percent from a year ago.

According to a report released by the OCC (Office of the Comptroller of the Currency) AKA Da Feds, 93.1 percent of mortgages were current and performing as required at the end of the first quarter of 2014, compared with 91.8 percent at the end of the previous quarter and 90.2 percent a year earlier.

The OCC Mortgage Metrics Report noted the percentage of mortgages that were 30 to 59 days past due decreased 19.8 percent from a year earlier to 2.1 percent of the portfolio of first-lien mortgages serviced by large national and federal savings banks. Seriously delinquent mortgages - 60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due - decreased to 3.1 percent compared to 4.0 percent in 2013. Nationwide,

The OCC said the factors contributing to the decline in foreclosure activity included improved economic conditions (no duh), transfer of loans to servicers not included in the report (a tricky little maneuver that, nonetheless, doesn’t darken a brighter forecast for the housing market), and foreclosure prevention assistance.

Speaking of which, did you know Fannie Mae and Freddie Mac have completed nearly 3.2 million foreclosure prevention actions since the start of their Foreclosure Prevention Program. These measures have helped more than 2.6 million borrowers stay in their homes, including 1.6 million who received permanent loan modifications. According to the Federal Housing Finance Agency's quarterly Foreclosure Prevention Report:

>Forty-two percent of all permanent loan modifications helped to reduce a homeowners' monthly payment by more than 30 percent. 

>Approximately 27 percent of borrowers who received permanent loan modifications had portions of their mortgage balance forborne (forgiven).

>More than 14,900 short sales and deeds-in-lieu were completed, bringing the total to more than 566,800 since the start of the conservatorships while foreclosure starts decreased a whopping 25 percent. 

>While the total number of troubled borrowers continued to decline, unfortunately 31 percent of these borrowers remained deeply delinquent. On a statewide basis, Florida, New York and New Jersey have the highest number of deeply delinquent loans (365+ days).

>There are specific locales in California where homeowners remain seriously delinquent such as Stockton and Lathrop, but in San Mateo County – not so much. The percent of delinquent mortgages in San Mateo County is only 5.5% out of 272,000 housing units. As they say... it's a start.