Although banks increased their loan workouts in the second quarter, rising delinquencies once again showed that problems were outpacing industry's efforts to slow the pace of foreclosures, according to a regulatory report released Wednesday.
A report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision said that mortgage workout actions increased by 75%, but that the overall mortgage outlook continued to decline. The number of mortgage delinquencies increased by 8.5% while foreclosures in process were up 2.9%.
The report said that most of the workouts were payment plans, which jumped by 74%, instead of loan modifications, which dropped 25% during the second quarter. In a conference call, regulators said those numbers did not reflect the Obama administration's Making Home Affordable Program, which offers modifications to homeowners but requires them to first complete a three-month trial before locking in terms. Such modifications are treated as workouts until the trial period expires, the agencies said.
The report said the 114,538 Making Home Affordable trial modifications would more than offset a 47,995 decrease in overall modifications during the quarter. Banks also performed 59,571 other trial modifications and 297,212 other payment plans. It's unclear how many trial modifications will remain current.