--New foreclosures rise 21% from the previous quarter

--High level of foreclosures likely to continue at elevated level, official says

--Number of completed foreclosures expected to rise, official says

(Updates with new details in the first paragraph, adds OCC comment in the fourth and penultimate paragraphs.)

WASHINGTON -(MarketWatch)- Newly initiated foreclosures in the U.S. jumped in the third quarter of the year and are expected to remain at a high level for the "foreseeable future," a U.S. bank regulator said Wednesday.

The number of new foreclosures increased by 21.1% during the third quarter, the Office of the Comptroller of the Currency said in a report.

The rise follows an end to voluntary freezes on foreclosures started in late 2010 by mortgage servicers, the OCC said. There were 347,726 newly initiated foreclosures during the July to September period. Nearly 1.33 million foreclosures were in process at the end of the quarter; 172,785 home forfeitures were completed.

"With this continued high level of seriously delinquent mortgages out there we will continue to see a high level of new foreclosure starts and at some point in the relatively near future we can expect to see the number of competed foreclosure sales...starting to pick up and increase," Bruce Krueger, lead mortgage expert at the OCC, said on a conference call with reporters.

While foreclosures climbed, the report showed that the overall quality of mortgages in the U.S. was little changed from the prior quarter, an indication that the market may be stabilizing, albeit with an elevated level of delinquencies.

The percentage of current and performing loans decreased by 0.1 percentage point from the previous quarter, to 88% of the overall portfolio examined by the OCC.

The portfolio comprises 62% of all mortgages outstanding in the U.S., or 32.4 million loans totaling $5.6 trillion in principal balances.

The percentage of mortgages that were 30 to 59 days delinquent was unchanged from the previous quarter, remaining at 3% of the overall portfolio, the OCC said.

The percentage of seriously delinquent mortgages, a category that includes mortgages that are 60 or more days delinquent, held steady at 4.9% of the portfolio.

Mortgage servicers, meanwhile, in many instances looked to avoid taking possession of a mortgaged property, the report said.

"Servicers continued to emphasize alternatives to foreclosure during the third quarter, initiating more than two-and-a-half times as many new home retention actions--loan modifications, trial-period plans, and payment plans--as completed foreclosures, short sales, and deed-in-lieu-of-foreclosure transactions," the report said.

Mortgage servicers implemented 458,899 new home retention actions during the quarter, the OCC said.

Still, the overall number of modifications was little changed from the previous quarter. The Home Affordable Modification Program, the Obama administration's signature loan-modification program, saw modifications drop by 23%, to 53,941.

Krueger said HAMP is a good program but fewer and fewer borrowers are able to qualify for its strict criteria.

During the past five quarters, servicers initiated more than 2.4 million home retention actions--889,990 modifications, 809,658 trial-period plans and 717,635 payment plans, the OCC said.