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Home mortgage foreclosures rise in third quarter

Home mortgage foreclosures and delinquencies were up in the third quarter despite greater efforts to help homeowners. Defaults on modified loans were also high.

A chain and padlock take the place of door knobs and locks on a foreclosed home in the Bronx, N.Y. in this March 2009 file photo. A survey released Monday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision sends a sobering message about the housing market.

Julie Jacobson/AP/File

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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.


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