Mortgage Performance Improved During the Third Quarter of 2015

Summary

Performance of first-lien mortgages continued to improve during the third quarter of 2015, according to the Office of the Comptroller of the Currency's (OCC) quarterly report on mortgages.

The OCC Mortgage Metrics Report, Third Quarter 2015, showed 93.9 percent of mortgages included in the report were current and performing at the end of the quarter, compared with 93.0 percent a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.3 percent of the portfolio, a 4.4 percent decrease from 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—made up 2.6 percent of the portfolio—a 16.1 percent decrease from a year earlier. Mortgage performance improved slightly from the previous quarter.

Foreclosure activity also declined. Reporting servicers initiated 64,156 new foreclosures during the third quarter, down from 82,668 a year earlier. The number of mortgages in the process of foreclosure at the end of the third quarter of 2015 was 269,751, a decrease of 23.8 percent from a year earlier. The percentage of mortgages within this portfolio that were in the process of foreclosure at the end of the third quarter of 2015 was 1.2 percent. Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity.

As mortgage performance improves, the need for other loss mitigation actions also declines. Servicers implemented 147,543 home retention actions during the quarter—including modifications, trial-period plans, and shorter-term payment plans. Nearly 88 percent of modifications made during the third quarter of 2015 reduced monthly principal and interest payments; 53.0 percent of modifications reduced payments by 20 percent or more. Modifications implemented during the quarter reduced payments by $243 per month on average.

Servicers implemented 3,800,210 modifications from January 1, 2008, through June 30, 2015. Almost 51 percent of these modifications were active at the end of the third quarter of 2015, and more than 49 percent had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. Of the 1,922,661 active modifications at the end of the third quarter of 2015, 71.2 percent were current and performing, 23.6 percent were delinquent, and 5.2 percent were in the process of foreclosure.

The mortgages in this portfolio comprise 42 percent of all residential mortgages outstanding in the United States—21.8 million loans totaling $3.7 trillion in principal balances. This report provides information on their performance through September 30, 2015.