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Definitions and Methods

January — June 2008

The OCC and OTS Mortgage Metrics Report uses standardized definitions for three categories of mortgage creditworthiness: prime, Alt-A, and subprime. These are defined using ranges of borrowers' credit scores at the time of origination, as follows: prime-660 and above; Alt-A-620 to 659; and subprime-below 620.

Roughly 15 percent of loans in the data were not accompanied by credit scores. The report classifies these loans "other." This group of loans includes a mix of prime, Alt-A, and subprime loans, and is, in large part, as the result of acquisitions of mortgage portfolios from third parties where scores were not readily available. The OCC and OTS are working with the participating banks and thrifts to obtain and include credit scores with future submissions to reduce the percentage of loans in this category.

Other standard definitions in the report include:

  • Seriously delinquent loans-All mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers who are 30 or more days past due. Loan delinquencies are reported following the Mortgage Bankers Association (MBA) convention that a loan is past due when a scheduled payment is unpaid for 30 days or more.

  • Loss mitigation action-Loan modification or payment plan.3

  • Loan modification-Mortgage for which terms of the loan are contractually changed, usually with respect to interest rates or terms of the loan.

  • Payment plan-Mortgage for which the servicer and a borrower have agreed to a short- to medium-term change in scheduled terms and payments to return the mortgage to a current and performing status.

  • New foreclosure-Mortgage for which the servicer commences a formal foreclosure proceeding during the month (e.g., public notice, judicial filing).4

The statistics and calculated ratios in this report are based on the number of loans rather than on the dollar balance outstanding.

 3 In addition to the two loss mitigation actions captured in this report-payment plans and loan modifications-mortgage servicers reported several alternative loss mitigation actions, including HomeSaver Advance, FHASecure, partial claims, new subsidy programs, and refinances with principal forgiveness. The agencies plan to include a broader range of loss mitigation actions in future reports.

 4 Many new foreclosures never result in the ultimate foreclosure sale or loss of the borrower's home, because banks and thrifts simultaneously pursue other loss mitigation actions and borrowers may act to return their mortgages to current and performing status.

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