September figures show that First Federal Bank of California, a wholly owned subsidiary of First Fed Financial Corp., has modified more than $1.4 billion worth of mortgages, resulting in home retention for nearly 3,000 borrowers.
September capped the most active three-month period for loan modifications since First Federal Bank of California launched its program. Nearly 900 mortgages worth some $442 million were modified in the third quarter, with more than 300 modifications occurring in September. More than one-third of the bank's option adjustable-rate mortgage (ARM) loan portfolio has been modified.
The bank also notes that its redefault rates compare favorably to the national average. For loans modified in the first quarter of 2008, 28.3% have become at least 30 days delinquent 12 months after they were modified.
By contrast, that figure is 65.9% for national banks and federally regulated thrifts, according to a September report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
First Federal Bank of California says that refinements made to its loan modification program, coupled with the flexibility that comes with modifying portfolio loans, enabled it to improve its modification success rate.
The bank took proactive measures, offering modifications before borrowers defaulted on their payments. Over 90% of the loans that the bank has modified since the program started were current at the time they were modified.
To handle many of its option-ARMs, First Federal Bank of California converted loans into fixed-rate mortgages for up to 10 years and eliminated negative-amortization provisions.
Overall loan delinquencies declined significantly as of Sept. 30 compared to their previous peak levels. Loans that were 30-59 days delinquent fell to $70.6 million as of that date, or 55% lower than the $157.5 at the end of January.
Loans that were greater than 60 days delinquent fell to $16.8 million, or 95% lower than the $341.3 million on Feb. 28. Loans in foreclosure fell 38% to $281.8 million from $456.2 million on June 30.
SOURCE: First Federal Bank of California