The credit quality of first-lien mortgages serviced by the largest national banks and thrifts remained steady during the second quarter, according to the Mortgage Metrics Report from the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).
However, with some data showing improvement and other data showing declines or remaining flat, the OCC and the OTS say the report presents ‘no clear trend’ in mortgage performance during the quarter.
According to the report, which represents 65% of all first-lien mortgages in the country, mortgage delinquency levels remained steady but elevated after rising for several quarters. About 87% of mortgages were current and performing – unchanged from the previous quarter but a decline from 88.6% in the same quarter a year earlier.
Completed foreclosures were up by 7%, increasing during the quarter to nearly 163,000 – a 54% increase from a year earlier – while newly initiated foreclosures were down. Servicers initiated more than 292,000 new foreclosure proceedings during the second quarter – the fewest new foreclosure proceedings of any of the previous five quarters.
Early-stage delinquencies – mortgages that are between 30 and 59 days delinquent – increased during the quarter, which the OCC and OTS say is consistent with seasonal trends. Early-stage delinquencies increased across all risk categories from the previous quarter but were down from a year earlier for prime, Alt-A and subprime mortgages.
On the loss mitigation front, the regulators report that servicers implemented more than 504,000 home-retention actions, including 273,000 loan modifications – an 18% increase from the first quarter.
An increasing number of recent-vintage modifications performed better than earlier modifications, the OCC and OTS add. At six months after modification, about 32% of the modifications made in 2009 were seriously delinquent or in the foreclosure process, compared with more than 45% of modifications made in 2008.
Performance of modifications made in 2010 suggests that this trend is continuing. At three months after modification, 11% of the 2010 modifications were seriously delinquent, compared with 20% for 2009 modifications and 32% for 2008 modifications.
More than 90% of the modifications implemented during the second quarter reduced borrowers' monthly principal and interest payments, and 56% of them reduced payments by more than 20%. Modifications made under the Home Affordable Modification Program during the quarter reduced monthly payments by an average of $608, while other modifications made during the quarter reduced payments by an average of $307.
On average, the reduction in borrower monthly payments as a result of modifications increased 62% from a year earlier.