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Foreclosures Ease a Bit

By Alan White

pBy Alan White/ppTwo new foreclosure reports are out today, one from a href=http://www.hopenow.com/upload/data/files/HOPE%20NOW%20Loss%20Mitigation%20National%20Data%20July%2007%20to%20November%2008.pdfHOPE Now/a and one from the a href=http://www.occ.treas.gov/ftp/release/2008-150.htmfederal bank regulators/a (OCC and OTS).#0160; November foreclosure filings are down in a trend that started in August, and modification numbers overall are increasing.#0160; The number of foreclosure sales also eased off a bit in November, and we will probably end calendar 2008 with a little less than one million completed foreclosure sales.#0160; The combined effect of various state (like a href=http://www.wjhg.com/home/headlines/35330709.htmlFlorida/a) and lender-initiated moratoria (like a href=http://www.citigroup.com/citi/press/2008/081111a.htmCiti/a and a href=http://www.jsonline.com/business/36400339.htmlMarshall amp; Ilsley/a) and the growth in modification agreements seems to be having an impact.#0160; /ppAt the same time, the OCC/OTS report cautions that mortgages modified in the first quarter of this year were redefaulting at high rates.#0160; After three months, 19% were more than 60 days past due, and that rate grew to 37% after six months.#0160; Although the vast majority of mortgages are securitized (about 88% in the OCC/OTS sample) the regulators did find that redefault rates were substantially lower for mortgages held by lenders in their own portfolios.#0160; This could be due to the lenders#39; greater flexibility to make aggressive modifications, such as reducing principal and forgiving past-due interest rather than capitalizing those amounts.#0160; This hypothesis is consistent with data from Credit Suisse and Merrill Lynch showing that modifications that reduce interest, principal and payments have bettea href=http://pubcit.typepad.com/.a/6a00d83451b7a769e20105368c60b3970b-pi style=float: right;img alt=Picture 2 border=0 class=at-xid-6a00d83451b7a769e20105368c60b3970b image-full src=http://pubcit.typepad.com/.a/6a00d83451b7a769e20105368c60b3970b-800wi style=margin: 0px 0px 5px 5px; width: 316px; height: 204px; title=Picture 2 //ar performance than modifications that capitalize unpaid amounts and do not reduce interest.#0160; The increasing number of modifications still consists mostly of the wrong kind./ppIn sum, modifications and moratoria are slowing down foreclosures but are not getting homeowners into sustainable debt repayment, yet.#0160; Many of the failed modifications from 2008 will be back in 2009; the question is whether we will have learned enough, and broken through the legal and other obstacles, in order to start the process of deleveraging homeowners in earnest.#0160;#0160;#0160; /p

Full post as published by CL&P Blog on December 22, 2008 (boomark / email).