Home mortgage foreclosures and delinquencies were up in the third quarter despite greater efforts to help homeowners. Defaults on modified loans were also high.
Banks and government agencies are ramping up their efforts to save troubled home loans, but not fast enough to keep the wave of foreclosures from rising.
That's the message from a government housing report released Monday.
Here are some of the key trends, both bad and good:
• Mortgage problems rose during the third quarter, with 6.2 percent of all loans seriously delinquent (60 days or more past due) and an additional 3.2 percent of all loans in the process of foreclosure. Delinquency among prime mortgages – the largest and highest-quality category – rose significantly.
• Banks and mortgage servicers expanded their efforts to save troubled mortgages by modifying the loans, especially through trial programs subsidized by the federal Home Affordable Modification Program (HAMP). For every six home-loan borrowers who were seriously delinquent or in foreclosure, about one borrower received a permanent or trial loan modification.
• Borrowers with modified loans show a high rate of re-default, but the pattern may be improving. More than half of all modified loans have re-defaulted within six months of the change. But the most recent modifications, ones made during the second quarter, show a lower initial rate of re-default than modifications done in prior quarters. That may signal that lenders are making bigger adjustments in the loans, to make payment more likely.
• Government-backed loan programs are in trouble right along with the rest of the mortgage market. Only 83 percent of loans guaranteed by the Federal Housing Administration or Veterans Benefits Administration are now listed as "performing," down from 85 percent in the second quarter. Some 92 percent of loans owned or insured by Fannie Mae or Freddie Mac (with implicit government backing) are performing, down from 93 percent in the second quarter. For comparison, the report classified 87 percent of all US home loans as performing.