OCC Reports Mortgage Performance For Fourth Quarter

Summary

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

The OCC Mortgage Metrics Report for the Fourth Quarter of 2012 showed 89.4 percent of mortgages were current and performing at the end of the quarter, compared with 88.6 percent the prior quarter and 88.0 percent a year earlier. The percentage of mortgages 30 to 59 days past due was 2.9 percent, a decline of 8.2 percent from the previous quarter and 6.1 percent from a year ago. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—remained at 4.4 percent for the third consecutive quarter, down 11.6 percent from a year earlier.

The number of loans in the process of foreclosure at the end of 2012 fell below one million for the first time since the end of June 2009. In the fourth quarter of 2012, servicers initiated 156,773 new foreclosures—the lowest number of new foreclosures since the OCC began reporting mortgage performance in the first quarter of 2008. The number of completed foreclosures fell to 105,875, a 7.7 percent decrease from the previous quarter and an 8.9 percent decrease from a year earlier.

Several factors contribute to the year-over-year improvement, including strengthening economic conditions, the ongoing effects of both home retention efforts and home forfeiture actions, and servicing transfers to institutions outside the federal banking system.

Servicers continued to emphasize alternatives to foreclosure during the quarter, implementing 367,169 home retention actions compared with 169,064 home forfeiture actions. The number of home retention actions implemented by servicers decreased by 4.1 percent from the previous quarter and decreased 20.2 percent from the prior year.

Other key findings included:

• On average, the modifications implemented in the fourth quarter of 2012 reduced borrowers' monthly principal and interest payments by $389, or 25.9 percent. Modifications made under the Home Affordable Modification Program (HAMP) reduced payments by an average of $558, or 35.4 percent.
• Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less. 54.8 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current or paid off at the end of the fourth quarter of 2012, compared with 36.5 percent of modifications made during that time that reduced payments by less than 10 percent.
• Servicers have modified 2,878,228 mortgages since the beginning of 2008 through the end of the third quarter of 2012. At the end of the fourth quarter of 2012, 47.7 percent of these modifications were current or paid off. Another 7.1 percent were 30 to 59 days delinquent, and 14.2 percent were seriously delinquent. There were 7.7 percent in the process of foreclosure, and 7.3 percent had completed the foreclosure process.

The report covers 29 million first-lien mortgages totaling $4.9 trillion in outstanding balances, about 57 percent of all first-lien mortgages in the United States.