Strengthening economic conditions, servicing transfers, home retention efforts and home forfeiture actions contributed to improved performance of home mortgages in the second quarter, the Office of the Comptroller of the Currency reports.
According to the OCC's Mortgage Metrics Report, 90.6% of mortgages were current and performing at the end of the second quarter, compared with 90.2% at the end of the first quarter and 88.7% at the end of the second quarter of 2012.
The report provides performance data on 52% of all first-lien residential mortgages outstanding – approximately 26.5 million loans with $4.5 trillion in unpaid principal balances.
Seriously delinquent mortgages (60 or more days past-due or held by bankrupt borrowers whose payments are 30 days or more past-due) fell to 3.8%, compared to 4% at the end of the second quarter and 4.4% a year ago.
The percentage of mortgages that were seriously delinquent decreased 15% from a year earlier. However, the percentage of early-stage delinquencies (mortgages that were 30 to 59 days past-due) was 2.9%, an increase of 11.6% from the previous quarter and up 1.8% from a year ago, which is a possible indication that defaults will increase in the second half of this year.
Foreclosure activity fell to its lowest level since the OCC first started tracking it in the first quarter of 2008. About 744,369 mortgages were in some stage of foreclosure at the end of the second quarter – a decrease of 39.8% from a year ago.
The number of newly initiated foreclosures continued to decline as well. About 150,592 new foreclosures were started during the second quarter – a drop of 50.8% compared to the second quarter of 2012.
The number of completed foreclosures in the second quarter fell 22.2% to 79,960.
Factors contributing to the reduction in foreclosure activity include improved economic conditions, aggressive foreclosure prevention assistance, regulatory actions, and transfer of loans to servicers outside of the federal banking system.Â
The OCC says home retention actions (modifications, trial-period plans and shorter-term payment plans), in addition to rising home prices, are what resulted in the decline in foreclosures.
During the quarter, servicers implemented 314,672 home retention actions, compared with 121,746 home forfeiture actions (completed foreclosures, short sales and deed-in-lieu-of-foreclosure actions). The number of home retention actions decreased 9.8% in the second quarter, compared to the first quarter, and dropped 25.2% compared to the second quarter of 2012.
About 93% of modifications reduced monthly principal and interest payments – and 59.1% reduced payments by 20% or more. Modifications reduced payments by $358 per month on average, while modifications made under the Home Affordable Modification Program (HAMP) reduced monthly payments by an average of $517.
Servicers modified about 3.18 million mortgages from the beginning of 2008 through the end of the first quarter of 2013. At the end of the second quarter, 46.6% of these modifications were current or paid off. Another 6.8% were 30 to 59 days delinquent, and 11.5% were seriously delinquent. Another 6.1% were in the process of foreclosure, and 7.5% had completed the foreclosure process.
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