OCC Reports Decline in Mortgage Performance

Summary

The OCC Mortgage Metrics Report, Third Quarter 2020 showed that 92.5 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 96.4 percent a year earlier.

The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—  was 5.8 percent in the third quarter of 2020, compared to 6.8 percent in the prior quarter and 1.5 percent a year ago.

Servicers initiated 369 new foreclosures during the third quarter of 2020¬, a 48.2 percent increase from the previous quarter and a 98.3 percent decrease from a year ago. Events associated with the COVID-19 pandemic, including foreclosure moratoriums, caused significant decreases in these metrics.

Servicers completed 14,097 mortgage modifications in the third quarter of 2020, and 40.8 percent of the modifications reduced borrowers’ monthly payments. Of these 14,097 modifications, 10,050, or 71.3 percent, were “combination modifications”— modifications that included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension. Among the 10,050 combination modifications completed during the quarter, 78.1 percent included capitalization of delinquent interest and fees, 69.9 percent included an interest rate reduction or freeze, 54.4 percent included a term extension and 47.4 percent included principal deferral. Of the modifications with a single action, 3,692 or 91.9 percent received a term extension.

The first-lien mortgages included in the OCC’s quarterly report comprise 27 percent of all residential mortgage debt outstanding in the United States or approximately 14.4 million loans totaling $2.87 trillion in principal balances.