Count of distressed mortgages continues to come down very slowly

26 Jun 2012 by Jim Fickett.

The Federal Housing Finance Administration recently released their quarterly Foreclosure Prevention report for Q1, detailing the state of the 30 million or so mortgages under the purview of Fannie Mae and Freddie Mac. The number of loans 90 days or more delinquent, or in foreclosure, remains very high and is coming down very slowly:

From time to time one sees some highly placed analyst predicting the imminent recovery of the US housing market. It is true that house prices may well be near the bottom, and that the new home market is improving a little. But as long as there is a huge backlog of distressed loans, it will be a case of “not quite as bad any more”, rather than a really healthy market.

Note also in the graph above that modifications have been slowly declining – presumably there are only so many loans one can save, and that supply is dwindling.

And finally, note that there has been no surge in forfeitures (completed foreclosures, short sales, and deeds in lieu). The same can be said of more recent months, as RealtyTrac recently reported that foreclosure sales, running mostly between 60 and 70 thousand per month in the latter half of last year, came in at 55 thousand in May. So despite the settlement with the banks, the backlog continues to clear very, very slowly.

(For background and sources see Fannie and Freddie delinquencies, mods and foreclosures and US home forfeitures.)