Major servicers initiated nearly twice as many home retention actions in the third quarter than actual foreclosures but they expect foreclosures will continue to rise in the coming quarters, according to an Office the Comptroller of the Currency and Office of Thrift Supervision report.
Data collected from nine of the largest bank and thrift servicers shows they completed 244,800 foreclosure actions (including short sales & deeds in lieu transactions) in the third quarter, compared to 470,300 home retention actions such as loan modifications, trial modifications and repayment plans.
Home retention actions declined 17% from the second quarter, while foreclosure actions increased 15% in the third quarter. Completed foreclosure actions are up 57.5% from a year ago.
"Completed foreclosures have risen for six consecutive quarters," according to the OCC/OTS Mortgage Metrics Report released on Thursday.
"Servicers indicated that completed foreclosure and other home forfeiture actions are likely to increase as alternatives for seriously delinquent borrowers are exhausted and loans in process of foreclosure proceed to foreclosure sale," the report says.
As of Sept. 30, the nine servicers had 1.2 million mortgages in the foreclosure process.
The quarterly Mortgage Metrics Report notes that HAMP modified loans continue to perform "better" than proprietary modifications.
Based on loans modified during the first quarter of 2010, the re-default (60 days or more past due) after six months is 12.6% for HAMP mods, compared to 24.1% for proprietary mods.
A recent survey the Hope Now servicers alliance did discovered that 55% of borrowers receiving proprietary modifications saw their monthly principal and interest payments reduced by 10% or more.
Under HAMP, nearly 80% of completed HAMP modifications reduce the borrowers' monthly P&I payments by 20% or more.
