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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®

Daily Real Estate News  |  June 30, 2011  |   Banks' Portfolios Still Plagued by Bad Loans
Nearly 20 percent of mortgages in banks’ portfolios were delinquent at the end of March, according to a report released this week by the Office of the Comptroller of the Currency, a bank regulator.

The government-sponsored enterprises are faring better in their portfolios: About 6.8 percent of mortgages backed by mortgage giants Fannie Mae and Freddie Mac were nonperforming, the report says.

However, the differences between the nonperforming rate of bank-held mortgages versus the GSEs may be explained in how foreclosures are being processed, Bruce Krueger, a senior OCC mortgage examiner, told The Wall Street Journal.

While the GSEs require mortgage servicers to follow certain timelines for loan modifications and foreclosures, banks do not. As such, delinquent borrowers with bank-held loans often linger longer before the foreclosure process is even initiate as well as often spend more time in foreclosure before being evicted.

With banks, nearly 8 percent of mortgages were in foreclosure at the end of March, compared with 2.6 percent of mortgages backed by Fannie Mae and Freddie Mac.

Source: “Bad Mortgages Weigh on Banks,” The Wall Street Journal (June 30, 2011)

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