The Office of Thrift Supervision and the Office of the Comptroller of the Currency have got together to examine what's happening to mortgages. And their conclusions, published in December in the Mortgage Metrics Report, Third Quarter 2009, make very sober reading.
Best Mortgage Lenders Now Hit by Foreclosure Tsunami
Perhaps the report's most shocking finding is that--for the first time ever--the number of those who borrowed from the best mortgage lenders (national banks, and savings and loans), and whose homes are now in foreclosure has reached a staggering one million.
And the percentage of those (previously) prime borrowers whose mortgage loans are 60 days or more delinquent has doubled between the third quarter of 2008, and the same period in 2009, according to the LA Times.
Is "Tsunami" Too Strong a Word?
Is tsunami to strong a word to describe the current wave of foreclosures? Maybe. But only if you want to reserve that word for what might have been. Because the Office of Thrift Supervision's press release that announced publication of the report says:
Servicers implemented nearly twice as many home retention actions as new foreclosures and, for every two homes lost in foreclosure sales, servicers provided opportunities for nine other families to keep their homes through new home retention actions.
In other words, the number of foreclosures would be dramatically higher if it weren't for the 680,153 loan modifications, payment plans, or trial period plans that were implemented during the third quarter.
Refinancing Could Help if Banks Would Play Ball
The New York Times carried a piece at the end of 2009 entitled: "Interest Rates Are Low, but Banks Balk at Refinancing." It stressed how low current mortgage rates are in historical terms, and pointed out that 60 percent of those homeowners who have a mortgage are paying more than current deals are offering.
Many home owners are either unable (because they don't qualify under banks' strict new rules) or unwilling to refinance. And that, as the Times points out, is a tragedy:
Refinancing could save owners hundreds of dollars a month, which could be spent, saved or used to pay down debts. Extra spending would help lift the economy, and lower payments might spare some people from losing their homes to foreclosure.
So the Times seems to think that refinancing is not only personally beneficial, but something verging on a patriotic duty. If you want to do your bit, compare mortgage rates here.