By Mike Colpitts
The foreclosure inventory of homes has grown to more than 30 times the volume of foreclosed homes that sell each month in the U.S. as 
federal efforts to stem the crisis fails, indicating that the flood of foreclosures will trouble the housing market for years to come, according to Lender Processing Services, which tracks properties for mortgage lenders.
The Obama administration’s program to save millions of homeowners from foreclosure is failing to aid the majority of troubled homeowners. The Republican led House voted Tuesday to eliminate the administration’s foreclosure prevention programs. But the Senate is expected to derail the legislation before it gets to the president’s desk, who said he would veto any bill to halt foreclosure aid.
Default notices and scheduled auctions were reported on 225,101 residential properties in February, a 14% drop in notices since the beginning of the year, according to RealtyTrac. The decline marked the largest drop since 2005, but was attributed to mortgage servicing companies’ temporary moratoriums on foreclosures.
Congress has committed $50 billion to foreclosure prevention, but amid political differences and programs that have been slow to get off the ground, the volume of foreclosures is increasing. Only 607,000 homeowners have received mortgage modifications through the government program.
Unemployed homeowners in California are also encountering problems with the states Hardest Hit Fund program with lenders who are refusing to take partial payments, even when a homeowner sends a second check to make up the difference for a mortgage payment. “It’s time that banks and servicers become part of the solution and not the problem,” said House Rep. Zoe Lofgren (D-San Jose).
LPS data also showed a 23% increase in Option ARM foreclosures over the last six months, which was far more than any other mortgage type. Option ARM foreclosures compose 18.8% of foreclosures, a higher level than Subprime mortgage foreclosures ever reached at the peak of the subprime crisis, the first shoe to drop in the nation’s real estate collapse.
Both jumbo and conforming prime loans showed increases in foreclosures and were the only mortgages that showed increases in delinquencies.
LPS also said that banks mortgage modification efforts have finally begun to show some signs of paying off with a growing number of loans that were 90 plus days delinquent a year ago, transforming to being on time after mortgage payments were reduced by lenders.
However, the report also showed another disturbing trend in the foreclosure crisis. The average U.S. loan now in delinquency is 537 days, and a full 30% of mortgages in the foreclosure pipeline have not made a payment in more than two years. The delinquency rate is 8.8% nationally with nearly 7-million mortgages that are late.