A third quarter report through Moody’s Investors Service said that servicers are beginning to sort and work through some of their foreclosure backlogs.  Moody’s report also shows that loan modifications are on the decline and servicers are opting to loss mitigation alternatives such as short sale and deeds in lieu.

Moody’s saw the decline in “total cure and cash flowing” were measuring an increased rate in loss mitigation efforts in the third quarter. The decline “resulted from servicers having worked through significant portions of their eligible 60-plus delinquencies,” according to Moody’s. Amongst the servicers to experience the greatest decrease in cures was JP Morgan Chase, GMAC, and Citigroup.

 Moody’s reported that the high cure rates involved a “significant number of re-modification”, which happens when a first modification fails. Re-defaults were seen through Ocwen at 54.5% of its subprime modifications which was the highest among its peers. Bank of America came in at 50.5% re-default on modifications of subprime loans.

However, Bank of America had the highest rate of re-defaults of ALT-A loans and in second came jumbo loans. Ocwen ranked the highest for re-modifications of subprime loans and in the third quarter was at 24.8%. Wells Fargo showed the second highest re-modification rate at 6.8%. The high re-default and re-modification rates at Ocwen, “calls into question Ocwen’s process in evaluating borrowers for a modification,” Moody’s states. Moody also said “not all of the first modifications were necessarily completed by Ocwen due to servicing acquisitions prior to the analysis period.”