Tag Archives: Delinquency Rate

For the second quarter of 2011, California homes entering the foreclosure process decreased to their lowest rate in four years, according to DataQuick, a San Diego-based company that tracks nationwide real estate activity. The number of notices of default decreased 17 percent from April to June when compared with the previous quarter and 19.2 percent when compared with the second quarter of last year. It was the lowest rate reported since the second quarter of 2007.

Bank of America says it is looking to downsize its mortgage servicing portfolio. Company executives told investors Tuesday that they will become more discriminating when adding mortgage servicing rights (MSRs) to their books and will be focused on selling off MSRs more aggressively. The company made roughly $70 million from MSR sales during the second quarter of this year, but on the whole posted its largest-ever three month loss - $8.8 billion - as a result of heavy losses within the consumer real estate services division.

JPMorgan Chase kicked off the banking sector's second-quarter earnings season with a $5.4 billion profit. It was followed by Citigroup's announcement that it pulled in net income of $3.3 billion. Both beat market expectations, however, neither lender escaped mortgage-related losses - a trait that is likely to show up on balance sheets throughout the industry as banks continue to grapple with delinquencies and additional costs tied to foreclosure reviews and litigation.

FICO's second-quarter survey of bank risk professionals reveals pessimism in regards to expected mortgage delinquencies in the second half of 2011. While 46 percent of respondents expected mortgage delinquencies to rise over the next six months, 18 percent expected them to decline. The numbers were similar in regards to delinquencies on home equity lines of credit, where 46 percent of respondents expected delinquencies to rise, while 22 percent expect them to decline. Bankers were somewhat optimistic about consumer credit.

With mortgage delinquencies at unprecedented levels, it's become clear that the current servicing-fee model is lacking. The GSEs and Ginnie Mae are in the process of developing new servicing compensation structures to provide greater flexibility for the servicing of nonperforming loans. As deliberations move forward, the Mortgage Bankers Association is recommending they consider the idea of a new ""reserve account"" strategy to cover the higher expenses associated with default servicing.

The national unemployment rate edged up in June to 9.2 percent, as the economy added just 18,000 jobs. The numbers were worse than market forecasts. Economists were expecting the rate to remain unchanged at 9.1 percent and job gains to be between 85,000 and 100,000. Declines in the labor market have added significantly to the volume of seriously delinquent mortgages. On Thursday, the administration announced that it was extending the mortgage forbearance period to 12 months for unemployed homeowners in government programs.

For the first time since the credit crisis began in 2008, the delinquency rate on loans held in commercial mortgage-backed securities (CMBS) has fallen for two consecutive months. After a modest reduction in May, the research firm Trepp LLC says the delinquency rate fell 23 basis points in June to 9.37 percent. Unfortunately, the company says, the rate reduction was driven primarily by a sharp spike in loans being resolved with losses, rather than delinquent loans actually curing.

Seriously past-due home mortgages continue to decline for the nation's largest mortgage company, continuing a 15-month path of descent. Fannie Mae says the share of single-family loans it holds that are 90 or more days past due or in foreclosure fell 8 basis points to 4.19 percent in April, and then dropped another 5 basis points to 4.14 percent in May. Fannie Mae says servicers completed modifications on 16,419 of its loans in May. For the first five months of the year, loan modifications total 84,133.

There were 4,084,557 mortgages in the United States 90 or more days delinquent or in foreclosure as of the end of May, according to Lender Processing Services (LPS). With foreclosure sales at 78,676 at month end, the volume of seriously past due loans over-shadowed the number of completed foreclosures by 50 to 1. In fact, LPS says there are still significantly fewer foreclosure sales than there were before foreclosure moratoria were put into place last fall. The biggest drops have been seen along the East Coast.

The performance of first-lien mortgages serviced by large national banks and thrifts improved in the first quarter as troubled loans worked through the system, according to a report released Wednesday by federal regulators. Their analysis of servicing portfolios as a whole found that loans serviced for government agencies and the GSEs are outperforming those held by banks and thrifts on their own books. Nevertheless, delinquencies improved across all risk categories and for all asset owners, while newly started foreclosures declined sharply.