OCC Reports Mortgage Performance For Third Quarter

Summary

The overall quality of first-lien mortgages serviced by large national and federal savings banks improved from the same period a year ago but declined from the prior quarter, according to a report released today by the Office of the Comptroller of the Currency (OCC).

The OCC Mortgage Metrics Report for the Third Quarter of 2012 showed 88.6 percent of mortgages were current and performing at the end of the quarter, compared with 88.7 percent the prior quarter and 88.0 percent a year earlier. The percentage of mortgages 30 to 59 days past due rose 10.4 percent from the prior quarter to 3.1 percent, a 3.6 percent increase from a year ago. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due—remained unchanged from the previous quarter at 4.4 percent and down 10.8 percent from a year earlier.

Several factors contribute to the year-over-year improvement, including strengthening economic conditions, servicing transfers, and the ongoing effects of both home retention loan modification programs and home forfeiture actions.

Servicers continued to emphasize alternatives to foreclosure during the quarter. Servicers implemented 382,899 home retention actions during the quarter, while initiating 252,604 new foreclosures. The number of home retention actions implemented by servicers decreased 8.9 percent from the prior quarter and decreased 16.6 percent from a year earlier.

Other key findings included:

• On average, the modifications implemented in the third quarter of 2012 reduced borrowers' monthly principal and interest payments by 23.8 percent, or $345. Modifications made under the Home Affordable Modification Program (HAMP) reduced payments by 35.3 percent on average, or $565.
• Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less. At the end of the third quarter of 2012, 52.8 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current and performing, compared with 32.8 percent of modifications made during that time that reduced payments by less than 10 percent.
• Since the beginning of 2008, servicers have modified 2,741,912 mortgages through the end of the second quarter of 2012. At the end of the third quarter of 2012, 46.7 percent of those modifications remained current or had been paid off. Another 7.6 percent were 30 to 59 days delinquent, and 14.4 percent were seriously delinquent. There were 9.6 percent in the process of foreclosure and 6.9 percent had completed the foreclosure process.

The report covers 29.8 million first-lien mortgages worth $5.1 trillion in outstanding balances, about 58 percent of all first-lien mortgages in the United States.