This Day On The Street
Continue to site
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

Foreclosure Starts Plummet on Mortgage Settlement: LPS

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 - Get Report), JPMorgan Chase (JPM - Get Report), Citigroup (C - Get Report), Wells Fargo (WFC - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.56 0.00%
C $46.28 0.00%
JPM $63.20 0.00%
WFC $49.98 0.00%
AAPL $93.74 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs