This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Foreclosure Starts Plummet on Mortgage Settlement: LPS

Stocks in this article: BACCJPMWFC

NEW YORK ( TheStreet) -- New foreclosure filings dropped sharply in October, as banks scrambled to comply with new servicing requirements under the national mortgage settlement.

According to the October Mortgage Monitor Report by Lender Processing Services, foreclosure starts declined 21.9% in October from the previous month and almost 48% lower than a year ago period. Foreclosure inventory fell by 7%.

But the drop-off is likely to be only temporary according to LPS Applied Analytics Senior Vice President herb Blecher.

"This decline coincided with the implementation of new procedural changes outlined in the National Mortgage Settlement, which requires, among other things, that mortgage servicers provide written notice to borrowers 14 days prior to referring a delinquent loan to a foreclosure attorney. This has resulted in what is likely a temporary slowdown in foreclosure starts that we do not believe is indicative of a longer-term trend,"said Blecher in a statement.

The five biggest mortgage servicers- Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) and Ally Financial- entered into a $26 billion settlement with federal and state regulators earlier this year over alleged fraudulent foreclosure practices, better known as "robo-signing".

Under the agreement, banks are required to offer various forms of mortgage relief to borrowers and also adhere to stricter standards regarding foreclosure. In states where banks need to prove a borrower is in default in court- judicial foreclosure states- scrutiny of foreclosure cases has been heightened.

Other states such as Nevada and California have enacted tough laws protecting borrowers from wrongful foreclosure practices.

The result has led to a slowdown in foreclosures, with banks increasingly preferring to pursue alternatives such as short sales and loan modifications.

Still, the pipleline of delinquent loans remains large.

The nationwide delinquency rate reduced to 7.03%, according to the LPS report, but that is still well above normal. States with the highest percentage of delinquent loans include Florida, Mississippi , New Jersey, Nevada and New York.

It remains uncertain how banks will continue to work through their problem loans and whether the shift from foreclosures is really permanent.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs