In Q409, the amount of mortgages falling behind by 90 or more days increased 21.1%, resulting in more foreclosures ahead, according to a study from the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). The OCC and the OTS report covers nearly 34m loans totaling $6trn in principal balances, representing 64% of all outstanding mortgages in the US. Overall mortgage performance declined for the seventh consecutive quarter, as 86.4% of the mortgages studied were current and performing at the end of Q409. Banks initiated fewer new foreclosures in the quarter, swelling projections of the “shadow inventory” of homes waiting to hit the market. The actual number of that inventory remains in debate. Standard & Poor’s showed it could take three years for the market to clear the overhang. Richard Powers, senior vice president of real estate sales at Altisource Portfolio Solutions said that number could double. The US Treasury Department launched the Home Affordable Modification Program (HAMP) in March 2009 to give incentives to servicers for the modification of loans on the verge of foreclosure. Today, the Treasury mandated that servicers participating in the program halt foreclosure procedures until a borrower has been considered for HAMP. In Q409, HAMP servicers initiated more than 250,000 new HAMP three-month trial plans and converted more than 21,000 trials into permanent modifications. But echoing same sentiments from the Treasury, servicers reported that HAMP and even some private-market foreclosure programs are not for everyone, and not everyone can get help. “In this regard, servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted,” according to the report. Write to Jon Prior.

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