OCC Reports Mortgage Performance Improvement Continues

Summary

The performance of first-lien mortgages serviced by seven national banks and one federal savings association improved in the third quarter of 2014, according to a report released today by the Office of the Comptroller of the Currency (OCC).

The OCC Mortgage Metrics Report, Third Quarter 2014, showed 93.0 percent of mortgages were current and performing at the end of the quarter, compared with 92.9 percent at the end of the previous quarter and 91.4 percent a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.4 percent of the portfolio—an increase of 1.9 percent from the previous quarter, but an 8 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 decrease of 0.9 percent from the previous quarter and 14.5 percent from a year earlier.

Foreclosure activity among the reporting servicers continued to decline. The number of mortgages in the process of foreclosure at the end of the third quarter of 2014 fell to 353,906, a decrease of 41.5 percent from a year earlier. The percentage of mortgages that were in the process of foreclosure at the end of the third quarter of 2014 was 1.5 percent. Servicers initiated 82,668 new foreclosures during the quarter, a decrease of 36.7 percent from a year earlier. The number of completed foreclosures also decreased 45.4 percent from a year earlier to 45,245. Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity.

Servicers implemented 205,689 home retention actions during the quarter—including modifications, trial-period plans, and shorter-term payment plans—compared with 58,214 home forfeiture actions during the quarter, which include completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions. The number of home retention actions implemented by servicers decreased by 1.2 percent from the previous quarter and 34.3 percent from a year earlier. In the third quarter of 2014, more than 90 percent of modifications reduced monthly principal and interest payments; 55.1 percent of modifications reduced payments by 20 percent or more. Modifications reduced payments by $257 per month on average, while modifications made under the Home Affordable Modification Program reduced monthly payments by an average of $284.

Servicers implemented 3,595,553 modifications from January 1, 2008, through June 30, 2014. Of these modifications, almost 57 percent were active at the end of the third quarter of 2014, and almost 43 percent had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation—foreclosure, short sale, or deed in-lieu-of foreclosure—or transfer to a non-reporting servicer. Of the 2,047,719 modifications that were active at the end of the third quarter of 2014, approximately 68.6 percent were current and performing at the end of the quarter, 25.7 percent were delinquent, and 5.7 percent were in the process of foreclosure.

The mortgages in this portfolio comprise 46 percent of all residential mortgages outstanding in the United States—23.6 million loans totaling $4.0 trillion in principal balances. This report provides information on their performance through September 30, 2014.