Mortgage Performance Improved During the Fourth Quarter 2014

Summary

The performance of first-lien mortgages serviced by eight national banks improved in the fourth quarter of 2014, according to the Office of the Comptroller of the Currency's (OCC) quarterly report on mortgage performance.

The OCC Mortgage Metrics Report, Fourth Quarter 2014, showed 93.2 percent of mortgages included in the report were current and performing at the end of the quarter, compared with 93.0 percent at the end of the previous quarter and 91.8 percent a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.4 percent of the portfolio, a 9.4 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 3.1 percent of the portfolio—a 12.2 percent decrease from a year earlier.

Foreclosure activity among the reporting servicers also continued to decline. The number of mortgages in the process of foreclosure at the end of the fourth quarter of 2014 fell to 315,922, a decrease of 39.7 percent from a year earlier. The percentage of mortgages that were in the process of foreclosure at the end of the fourth quarter of 2014 was 1.4 percent. Servicers initiated 75,395 new foreclosures during the quarter, a decrease of 39.4 percent from a year earlier. The number of completed foreclosures also decreased 35.3 percent from a year earlier to 39,331. Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity

Servicers implemented 195,577 home retention actions during the quarter—including modifications, trial-period plans, and shorter-term payment plans—compared with 49,749 home forfeiture actions, which include completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions. The number of home retention actions implemented by servicers decreased 19.5 percent from a year earlier. In the fourth quarter of 2014, more than 88 percent of modifications reduced monthly principal and interest payments; 52.2 percent of modifications reduced payments by 20 percent or more. Modifications reduced payments by $243 per month on average, while modifications made under the Home Affordable Modification Program reduced monthly payments by an average of $274.

Servicers implemented 3,649,010 modifications from January 1, 2008, through September 30, 2014. Of these modifications, more than 55 percent were active at the end of the fourth quarter of 2014 and 45 percent had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. Of the 2,012,632 active modifications at the end of the fourth quarter of 2014, 68.8 percent were current, 25.8 percent were delinquent, and 5.4 percent were in the process of foreclosure.

The mortgages in this portfolio comprise 45 percent of all residential mortgages outstanding in the United States—23.1 million loans totaling $3.9 trillion in principal balances. This report provides information on their performance through December 31, 2014