Yesterday, the Office of Thrift Supervision (OTS) and the Office of the Comptroller of the Currency (OCC) released their latest home mortgage data, which covers the third quarter of 2009. The OCC and the OTS compile data on mortgages held by national banks and thrifts, which account for about 65 percent of mortgages nationwide, and the numbers show just how ugly the housing crisis still is:
[T]he percentage of current and performing mortgages dropped for the sixth consecutive quarter to 87 percent of the servicing portfolio, serious delinquencies rose to 6.2 percent, and foreclosures in process surpassed 1 million mortgages…Of particular note was the deterioration among prime mortgages, the largest category of mortgages. Serious delinquencies at the end of the third quarter increased to 3.6 percent of prime mortgages, up almost 20 percent from the previous quarter and more than double a year ago.
This is the first time ever that more than 1 million mortgages held by national financial institutions have been in foreclosure in a single quarter. But the point about the foreclosure plague spreading even further into prime mortgages is perhaps the most disheartening, as the foreclosure prevention programs that have been put in place so far by Congress and the administration aren’t meant to handle these sorts of problems.
The growth in prime mortgage foreclosures confirms that unemployment — not subprime lending — is now the factor driving most foreclosures. Indeed, the OCC/OTS data is making the TARP Congressional Oversight Panel’s October report on the administration’s foreclosure prevention plans seem spot-on:
[The Home Affordable Modification Program] was not designed to address foreclosures caused by unemployment, which now appears to be a central cause of nonpayment…The foreclosure crisis has moved beyond subprime mortgages and into the prime mortgage market. It increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.
So as Daily Finance’s Lita Epstein pointed out, “the elephant in the room…is how to help the millions of people who have lost their jobs stay in their homes.” Included in the regulatory reform bill passed by the House last week was a $3 billion program for providing loans to borrowers who have “lost their jobs but who have a reasonable prospect that they will be able to resume full mortgage payments.” This is a decent enough start, but it can’t be the end, unless Congress and the administration want to rely on programs that aren’t really up to the task.