Mortgage Performance Improve in Third Quarter 2016

Summary

Performance of first-lien mortgages improved during the third quarter of 2016 compared with a year earlier, according to the Office of the Comptroller of the Currency's (OCC) quarterly report on mortgages.

The OCC Mortgage Metrics Report, Third Quarter 2016, showed 94.8 percent of mortgages included in the report were current and performing at the end of the quarter, compared with 93.9 percent a year earlier.

The report also showed that foreclosure activity has declined. Reporting servicers initiated 47,955 new foreclosures during the third quarter of 2016, a 25.3 percent decrease from a year earlier.

As first-lien mortgage performance improves, the need for other loss mitigation actions declines. Servicers implemented 35,642 mortgage modifications in the third quarter of 2016. Eighty-eight percent of the modifications reduced borrowers' monthly payments.

The OCC instituted the following changes to its data collection method for the data reported in this report:

• Servicers now submit data for prime, alt-a, subprime, and other mortgages using their internal credit scoring system rather than FICO scores.
• The report now includes first-lien, closed-end home equity loans.
• Banks now submit aggregate data directly to the OCC, as opposed to submitting loan level data to a third-party aggregator.

The first-lien mortgages included in the OCC's quarterly report comprise 36 percent of all residential mortgages outstanding in the United States or about 20.4 million loans totaling $3.5 trillion in principal balances. This report provides information on mortgage performance through September 30, 2016.