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New foreclosure filings fell in fourth quarter

For various reasons, the number of foreclosures that were filed fell in the final quarter of 2011, with a slight decrease in the volume of foreclosures actually in process. Some believe that the historic $25 billion will go a long way toward keeping this number down.

Foreclosure filings fell

According to the Office of the Comptroller of the Currency (OCC), the number of new foreclosure filings on American homes fell in the fourth quarter and while OCC official Bruce Krueger notes there has yet to be a robust recovery in the overall health of loans, programs are keeping borrowers in their homes.

Fourth quarter filings fell 16 percent from the previous quarter, marking an 18 percent drop from a year earlier. Foreclosures in process for the quarter fell 4.1 percent from the third quarter of 2011.

Kreuger notes that part of the dip is due to regulators’ efforts to get banks to stop “dual tracking” (wherein a foreclosure is filed while a loan modification is pending). Bank and government programs are seeking ways to keep homeowners in their homes rather than following the trend in recent years of going straight to foreclosure filings.

“I think we’re certainly seeing signs that servicers are starting to clamp down on that dual-tracking process,” Kreuger told reporters. “We certainly are not yet seeing signs of a robust recovery in the overall quality of the mortgage servicing portfolio.”

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Market stabilization on the horizon?

Signs of market stabilization are here and Kreuger said that there is evidence that banks are pulling more borrowers out of the foreclosure process to negotiate a loan modification, a trend others are echoing. While incentives from the government are higher now for modifying loans and banks are more willing, modification programs do not always work.

Last month, after a year of heated negotiations, Bank of America, Cigitroup, Wells Fargo, JPMorgan Chase, and Ally Financial settled with 49 state attorneys general and the federal government for $25 billion to settle foreclosure abuses.

Settlement details were not immediately made public, but after thousands of pages of documents were released, AGBeat published a detailed breakdown of the $25 billion settlement which is pending final judicial approval but is expected to sail through.

Krueger said that going forward, the settlement will aide in the amount of loan modifications (particularly principal reductions) being offered, thus keeping homeowners in their homes.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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