New Foreclosures Jump 21 Percent

Foreclosure activity increased sharply in March, a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall.

Foreclosures were initiated on more than 217,000 homes in March, a 21 percent increase over February’s rate, according to information released today by the HOPE NOW alliance. Nearly 85,000 properties were forfeited through foreclosure sales during the month, a 35 percent increase over February.The increase in foreclosures occurred despite a declining trend in mortgage delinquencies. There were 2.63 million residential mortgages at least 60 days past due in March, a 6 percent decline from February’s level of 2.78 million, which in turn represented a similar decline from 2.95 million in January.Meanwhile, the number of at-risk homeowners obtaining private mortgage loan modifications from their lenders also increased significantly in March. Nearly 77,000 propriety loan modifications were completed in March, up from 61,000 the month before. Four out of five reduced borrower’s monthly mortgage payments, with just over half reducing payments by 10 percent or more.There was no updated information provided for loan modifications performed through the government’s Home Affordable Modification Program, for which March data has not yet been released. HAMP guidelines require that all modifications done under the program reduce a borrower’s mortgage payments.Private modifications have recently been outpacing HAMP modifications by about a 3-to-1 ratio.   Many major lenders cut back their foreclosure operations after it was revealed last fall that some were taking legal shortcuts in documenting foreclosure claims, a situation that became known as the robosigning scandal. Many pending foreclosure actions were deferred while mortgage servicers developed new approaches to properly handle thousands of foreclosure actions a month.The HOPE NOW alliance is a coalition of industry groups, nonprofit consumer agencies and government entities working together to address the foreclosure crisis.