Clearly, unless and until the expanding pace of mortgage foreclosures begins to slow, the United States' economic mess can't be corrected. A second report released this week by the Office of the Comptroller of the Currency and the Office of Thrift Supervision effectively throws icy water on any notion that better times are coming soon.

The report, which covers the third quarter of the year, was the second such indication of the effectiveness -- or lack thereof -- of new efforts at foreclosure mitigation. It examined the portfolios of nine national banks and five thrifts, including JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and First Horizon (NYSE:FHN), representing more than 60% of all U.S. mortgages outstanding.

As detailed in the report, the first since the initial tabulation was put out in June, new foreclosure initiatives actually fell by 2.6% to 281,298 in the September quarter (largely due to mortgage relief programs). But a perhaps more important metric, foreclosures completed, increased by 8%, while the total number of foreclosures in process rose by 11% to 617,642.

There was also a disturbing new trend in the report released by Comptroller of the Currency John C. Dugan: More than half of the mortgages modified in the first quarter to benefit struggling borrowers had fallen back into delinquency, once again more than 30 days past due by the end of September.

Only in February -- well into the current housing crisis -- did the OCC begin to require the nine banks to begin submitting the information contained in the first two reports. In fact, in comments accompanying the first report, Mr. Dugan stated that, in creating the new report, "the OCC seized the opportunity to improve the way mortgage performance is measured." Frankly, with the housing slowdown having begun at least two years ago, I'm more inclined to call this "seizure" a tardy effort.

So the message here, it seems to me, is that housing and homebuilding will continue to dance on or near the bottom -- the same trough luxury builder Toll Brothers' (NYSE:TOL) CEO Bob Toll erroneously called two years ago. My feeling is that two years hence, the sector's plight likely will have changed very little. That's not good news for our economy -- or for potential investors in the homebuilding sector.  

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