A pair of reports indicate the inventory of foreclosed homes has swelled and the real estate recovery has been delayed as a result of the foreclosure affidavit crisis. Another finding was that the Home Affordable Modification Program has failed to achieve its objective.
The October Mortgage Monitor report released by Lender Processing Services shows that foreclosure sales decreased by 35 percent in October as a result of the widespread halt to foreclosures. That allowed the inventory of foreclosed homes to rise to 7.4 times the historical average, adding to the backlog of homes on an already-depressed market.
LPS reported that the total inventory of foreclosures is nearly 2.1 million loans with another 2.2 million loans in the ‘greater than 90-days delinquent, but not yet in foreclosure’ status.
In Iowa, 6.3 percent of mortgages were delinquent in October and the inventory of homes in foreclosure rose 2.8 percent. The report showed 9 percent of Iowa mortgage holders are not current with their payments, up 7.7 percent from six months ago. Nationwide, 9.29 percent of mortgages were delinquent last month. The inventory of homes in foreclosure rose 3.92 percent in October and 13.2 percent of all mortgage holders were not current with their payments.
The inventory of delinquent loans, foreclosures, and bank-owned real estate stands at 7 million homes nationally, which would take the market more than three years to absorb, according to Fitch Ratings.
As major banks fix recent problems in the foreclosure process, the New York and London-based global rating agency expects that number will continue to grow.
Fitch contends that the foreclosure moratorium and related state and federal probes has prolonged the housing correction under way and will further reduce home prices and increase losses on residential mortgage-backed securities.
The average time required to take a foreclosed home from the last payment to resale was 18 months in September, according to Fitch, the highest length of time on record.
As foreclosure activity increases, more six- and 12-month delinquent loans are moving to foreclosure, but the extremely delinquent category –more than 12 months — continues to grow and age, according to LPS.
The Jacksonville, Fla., provider of residential mortgage processing and industry data reported that a payment has not been made in more than a year on almost one-third of all mortgages that are 90 days or more delinquent.
Fitch and LPS said the mortgage modification process that was launched by the Obama administration to stem the tide of Americans losing their homes also has not produced the desired effect.
