The nation's largest mortgage servicers foreclosed on 95,067 homes during the fourth quarter of 2010, a 49 percent drop from the number of completed foreclosures during the previous quarter, according to a new report from two regulatory agencies.
The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS), which oversee large national banks and thrifts and subsequently their mortgage servicing businesses, attributed the sharp decline in foreclosures to the fact that the largest mortgage servicers slowed foreclosure actions during the fourth quarter to review their processes and procedures after robo-signing practices were exposed.
Newly initiated foreclosures also decreased but by a much smaller ratio. Foreclosure starts among the largest servicers totaled 352,318 during the last three months of 2010, a decline of 8 percent when compared to the previous quarter.
Because new foreclosures outpaced completed foreclosures, the inventory of foreclosures in process increased by more than 7 percent to 1,290,253. According to the OCC-OTS
report, that figure represents 3.9 percent of all serviced loans.
""New and completed foreclosures are likely to increase in upcoming quarters as moratoria are lifted and the large inventory of seriously delinquent loans and loans in process of foreclosure work through the system,"" the regulators warned.
During the final three months of 2010, servicers initiated more than three times as many home retention actions as completed home forfeiture actions, according to the report.
Servicers implemented 473,415 home retention actions (loan modifications, trial period plans, and shorter term payment plans), compared with 146,132 completed home forfeiture actions (completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions).
Officials at the OCC and OTS note that the overall credit quality of first-lien mortgages serviced by large national banks and thrifts continues to improve.
The regulatorsÃ¢â‚¬â„¢ fourth-quarter study showed that 87.6 percent of the 32.9 million loans serviced by the institutions under their supervision were current and performing at the end of last year.
Ã¢â‚¬Å“While mortgage delinquency levels remained elevated, the overall quality of the portfolio of mortgages included in this report improved from the previous quarter,Ã¢â‚¬Â the regulators said.
The percentage of mortgages that were seriously delinquent declined for the fourth consecutive quarter to 5.4 percent Ã¢â‚¬" the lowest level since the second quarter of 2009.
The OCC-OTS report covers about 63 percent of all first-lien mortgages in the country, worth $5.7 trillion in outstanding balances.