Almost 900,000 loans that were current at the beginning of the year are at least 60 days delinquent or in foreclosure as of July, according to the July 2010 month-end report released by Lender Processing Services’(LPS). Although delinquency volume fell 2.3% month-over-month in July to 9.3%, it remains near historically elevated levels — and record high numbers of delinquent loans are still entering the system, according to LPS. The volume of delinquencies increased 1.4% year-over-year. The volume of cured loans, those going from six months delinquent to current, declined to about 10%, down from this year’s peak of 14% in March, sparking an increase in foreclosure starts to the fourth highest level ever recorded by LPS. Mortgage servicers moved more than 280,000 loans into the foreclosure process in July, the fourth highest month on record, according to Lender Processing Services’ (LPS) mortgage monitor report. LPS monitors data on 53.9 million mortgages in the U.S. In July, 0.52% were rolled into the foreclosure process. Further, GSE foreclosure starts are accelerating with increased cancellations in the Home Affordable Modification Program (HAMP). In July, the Treasury Department reported 616,839 canceled HAMP trial modifications, which surpassed the 434,716 converted into permanent status. In order to be moved into a permanent modification, borrowers must make three monthly payments in the trial. Trials can be canceled for many reasons, such as insufficient documentation or dramatic change in credit scores. “Foreclosure starts increased to the fourth highest level on record with rebounds in the portfolio and private markets compounding the recent acceleration in agency foreclosure starts leading to a significant jump in rates,” according to LPS. How long these loans are staying in the foreclosure process is stretching out as well. The average number of days a loan spends delinquent before it is finally forecloses reached 469 days in July, about a year and three months. In July of last year, the average was 351, more than three months shorter. The total amount of loans in the foreclosure inventory passed 2 million in July, a 3.5% increase from a year ago, and 2.1% more than the previous month. The amount of foreclosures making it to REO status is picking up after diving earlier in the year. LPS reported nearly 100,000 REO properties in July. Write to Christine Ricciardi. Jon Prior contributed to this report

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