In a new report published by the Office of the Comptroller of the Currency, it has been noticed that fewer mortgages were delinquent in the first quarter of 2012 compared to that first quarter of 2008 when the recession started. These improvements, as per the report, are due to the strengthening economy. Along with this, it is also due to the increased use of home retention loan modification programs offered by the government.
Let's take a look at the available data:
- The number of newly-initiated foreclosures fell 8% when compared with the last year’s data.
- The percentage of seriously delinquent home loans dropped 10.4% compared to that of the last quarter.
These finding are the based on the data given by the top 9 banks which hold around some 60% of first-lien mortgages.
Reason for housing market improvement:
The two main reasons of this housing market improvement are as follows:
- Strengthening of economy to a certain extent
- Increased use of loan modification programs
It has been noticed that in the first quarter of 2012, many new home retention actions such as loan modifications, trial-period plans, and payment plans were offered by the lenders which twice as compared to that of the previous years. This has resulted in lowering of the numbers of foreclosures, short sales, and deed in lieu of foreclosure transactions. Apart from this, only 10.2% of loan modifications included principal reductions. The report also notified that the greater the rate of decrease in monthly payments, the better the performance.
The report also states that the loan servicers implemented 352,989 new home retention actions during the previous quarter.