Nine major servicers regulated by the Office of the Comptroller of the Currency completed 180,000 foreclosure actions in the second quarter, but these firms are still managing roughly 1.3 million borrowers who are going through the foreclosure process.

According to new figures compiled by the agency, the percentage of loans in foreclosure has stabilized at 4% over the past three quarters.

In a conference call with reporters, an OCC official called the latest findings “encouraging” because the foreclosure volumes are not increasing. (However, a 4% foreclosure rate is high by historic standards.) 

"There still are challenges in moving foreclosures though the system and resolving the overhang of those loans," he said.

The OCC uses figures culled from eight national banks and one thrift – institutions that service 63% of all outstanding home mortgages in the U.S. 

The nine also are under regulatory orders to reform and revamp the way they process foreclosures and deal with at-risk borrowers.

The second quarter OCC Mortgage Metrics report shows a quarterly jump in loan modifications that meets the parameters of the government's Home Affordable Modification Program (HAMP), and a drop in proprietary modifications.

Completed HAMP mods jumped 31% from the first quarter to 70,000 in the second, while proprietary modifications fell 24% to 80,500 quarter over quarter.

The OCC official noted there was a concerted push in the past two quarters to get more mortgagors qualified for HAMP modification trials.  This resulted in more HAMP mods as borrowers completed the three-month payment trials.

HAMP modifications require deeper reductions in a borrower's monthly mortgage payments than proprietary mods and have lower re-default rates.

(One year after modification, only 17.3% of borrowers with HAMP modifications are 60 days or more delinquent.)

The re-default rate on proprietary modifications is 31.4%, according to new OCC figures on restructurings completed during the second quarter of 2010.

"The lower post-modification delinquencies reflect HAMP's emphasis on the affordability of monthly payments relative to the borrower's income, verification of income and completion of a successful trial payment period," the OCC report says.

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