Lenders efforts to help homeowners stave off foreclosure are intensifying, according to a new report released Wednesday by the Office of the Comptroller of the Currency (OCC). But the news isn't all good - the banking regulator also said that more than 50 percent of homeowners with loans modified in the first half of last year had fallen behind on their payments, yet again, within the 12 months that followed. Economic conditions have resulted in higher rates of delinquencies and foreclosures in process, which increased to 8.5 percent and 2.9 percent of all serviced mortgages.
The FDIC's insurance fund, which protects consumers' deposits, is heading for broke and according to the federal agency, it will stay that way until 2012. The FDIC is asking insured institutions to prepay three years worth of quarterly fees in order to refill its coffers and cope with many more bank collapses to come. The proposal is expected to yield $45 billion, and the FDIC says without this extra cash its funds will be completely wiped out by next year. Officials say the banking industry has substantial liquidity to prepay assessments - 22 percent more than they did a year ago.
The Mortgage Electronic Registration Service (MERS), which was set up to facilitate the quick transfer of mortgages between lenders and the inclusion of the loans in mortgage-backed securities, may not hold water legally in foreclosure proceedings - as confirmed by a Kansas Supreme Court ruling earlier this month.
Gains in the prices of some formerly toxic assets may prompt banks to book some profit on positions they have already written down, but boards and auditors are likely to advise them to be cautious. Some executives point out the market for toxic assets is thin, and price increases could be short-lived.
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