Mortgage servicers increased foreclosure starts on Fannie Mae and Freddie Mac loans for the first time since 2010, according to the Federal Housing Finance Agency.
The more than 226,000 starts on agency mortgages in the first quarter increased just 4% from the previous three months, according to the report. It remains below the 260,000 starts one-year prior and well down from the 339,000 peak in the third quarter of 2010.
Servicers froze the foreclosure process in October 2010 to correct documentation problems. State and federal investigations brought new guidelines and relief efforts for delinquent borrowers since.
While the amount of troubled loans has been inching downward, the GSEs still combine to hold more than 1 million mortgages in serious delinquency, meaning 90 days or more past due.
Amazingly, more than 542,000 GSE mortgages have been delinquent for more than one year. More than 162,000 of these year-long problem loans reside in Florida, the most of any state.
For the broader housing market, foreclosure starts increased 16% in May, to the highest level since October, according a report from RealtyTrac this week. Starts increased in 33 of the 50 states with the biggest restart more than doubling in New Jersey.
Still, the foreclosure reboot remains subdued. Foreclosure filings overall – which include repossessions – dropped for the 20th straight month in May, according to RealtyTrac.
While most of the market shows short sales are taking precedent over REO sales because of the extended foreclosure timelines, the story is different at the GSEs.
The GSEs disposed of more than 77,000 REO in the first quarter, more than double the roughly 31,000 short sales, according to the FHFA.