Improvement in Mortgage Performance Continues, OCC Reports

Summary

The performance of first-lien mortgages serviced by large national and federal savings banks continued to improve in the third quarter of 2013, 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 2013 indicates that strengthening economic conditions, servicing transfers of home mortgages, home retention efforts, and home forfeiture actions contributed to improved performance of home mortgages in the third quarter of 2013.

The report showed 91.4 percent of mortgages were current and performing at the end of the quarter, compared with 90.6 percent at the end of the previous quarter and 88.6 percent a year earlier. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased to 3.6 percent compared with 3.8 percent at the end of the previous quarter and 4.4 percent a year earlier. The percentage of mortgages that were seriously delinquent decreased 16.8 percent from a year earlier. The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.6 percent, down 8.4 percent from the previous quarter and down 15.5 percent from a year ago.

The number of loans in the process of foreclosure at the end of the third quarter of 2013 fell to 604,763, a decrease of 47.8 percent from a year earlier. Servicers initiated 130,592 new foreclosures during the third quarter, a 48.3 percent decrease from a year earlier. Compared to a year ago, the number of completed foreclosures fell 27.8 percent to 82,841. Factors contributing to the reduction in foreclosure activity include improved economic conditions, foreclosure prevention assistance, and transfer of loans.

Servicers implemented 311,660 home retention actions (modifications, trial-period plans, and shorter-term payment plans) in the quarter compared with 116,214 home forfeiture actions (completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions). The number of home retention actions implemented by servicers decreased by 0.9 percent from the previous quarter and 18.6 percent from a year earlier. In the third quarter of 2013, 92.4 percent of modifications reduced monthly principal and interest payments, and 62.5 percent of modifications reduced payments by 20 percent or more. Modifications reduced payments by $365 per month on average, while modifications made under the Home Affordable Modification Program reduced monthly payments by an average of $509.

Servicers have modified 3,288,717 mortgages from the beginning of 2008 through the end of the second quarter of 2013. At the end of the third quarter of 2013, 45.5 percent of these modifications were current or paid off. Another 6.3 percent were 30 to 59 days delinquent, and 11.1 percent were seriously delinquent. Another 5.1 percent were in the process of foreclosure, and 7.8 percent had completed the foreclosure process.

The mortgages in this portfolio comprise 50 percent of all mortgages outstanding in the United States—25.6 million loans totaling $4.4 trillion in principal balances. This report provides information on their performance through September 30, 2013.