Yes, delinquency rates exclude home loans already in foreclosure. At the fourth quarter’s end, that figure stood at 1.5 million home mortgage loans which is about 3.30 % of all mortgages on the market.  “Foreclosure inventory jumped sharply in the fourth quarter, even though the rate at which home mortgages were entering foreclosure remained unchanged,” said the association’s chief economist, Jay Brinkmann.  He attributed that primarily to state and local moratoriums on foreclosure sales, as well as the November decision by Fannie Mae and Freddie Mac to halt such sales, loan servicers’ reluctance to proceed with evictions over the December holidays, and overburdened legal processes in some areas.

 

A flat foreclosure rate does not necessarily mean housing’s downturn has hit bottom. The survey showed that the percentage of loans 90 days past due increased in the fourth quarter, but that foreclosure actions on a large number did not occur as servicers tried to modify loans and deal with investors who own securities of which these mortgage loans are a part.   Because loan servicers have been unwilling to talk with homeowners who are not behind in their payments, Brinkmann said, some “borrowers are running their accounts 90 days delinquent in order to qualify for certain modifications.”

 

A provision of the Obama administration’s plan to help cut the delinquency rate allows borrowers who are current on their mortgages to negotiate with servicers about loan modification options.  Gibran Nicholas, chairman of the CMPS Institute, which certifies mortgage bankers and brokers, complained that the plan’s guidelines lack a maximum total-debt ratio.  For example, modification might reduce a borrower’s mortgage payment to the plan’s target 31% of monthly income, but his or her total overall debt load, including car loans and credit cards, could be 75%.  “If the borrower defaults on the loan modification, taxpayers are on the hook for more money,” Nicholas said.   Read the complete article> Mortgage Foreclosures Rise in 4th Quarter