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The overall level of current and performing mortgage loans fell slightly in the second quarter as early stage delinquencies ticked up, according to the latest mortgage metrics report.
September 29 -
The overall level of current and performing mortgages improved in the first quarter to 88.6%, up from 87.6% in the previous quarter and 87.3% a year earlier, according to the latest mortgage metrics report issued by the Office of Comptroller of the Currency and the Office of Thrift Supervision Wednesday.
June 29
WASHINGTON — The number of new foreclosures increased 21.1% in the third quarter as mortgage servicers lifted voluntary moratoria implemented late last year, according to a report released Wednesday by the Office of the Comptroller of the Currency.
Servicers exhausted foreclosure alternatives for the large inventory of seriously delinquent loans that were working their way through the loss mitigation process, leading to the quarterly spike, according to the OCC's quarterly mortgage metrics report.
Bruce Krueger, the agency's lead mortgage expert, said a decrease in the number of seriously delinquent loans in the fourth quarter of 2010 and the first quarter of this year led to a drop in new foreclosure actions in the second quarter. That made the third-quarter increase seem more dramatic, Krueger said.
"While it was a 21% uptick, it's really getting back into the range it was prior to the second quarter," he said.
Servicers initiated 347,726 foreclosures in the third quarter, compared to 287,162 in the second quarter, 312,235 in the first quarter, and 355,945 in the fourth quarter.
Although delinquencies remained stable from the previous quarter, and even declined from a year earlier, they still remain elevated compared to historical levels, Krueger said.
Given the large overhang of seriously delinquent mortgages — loans that are 60 or more days past due — Kruger said he expects new foreclosures to remain in the current range through most of 2012.
"I would expect that to continue going forward, so long as we have this large pipeline of seriously delinquent mortgages out there," he said.
The overall quality of the portfolio has remained unchanged, according to the report, with the percentage of current and performing loans decreasing by 0.1% from the previous quarter, and increasing 0.7% from a year earlier, to 88% of the overall portfolio.
Servicers also took longer to complete foreclosures, resulting in a 0.5% increase in the number of foreclosures in process, to 4.1% of the overall portfolio, or 1.3 million loans, at the end of the third quarter, the report said.
The report also focused on foreclosure alternatives, and found that, on average, modifications completed in the third quarter reduced borrowers' monthly principal and interest payments by 24.4%, or $382. Modifications made under the Home Affordable Modification Program, or Hamp, reduced payments by about 35% on average, or $567.
Modifications that reduced payments by 10% or more performed better than those that reduced payments by less, the OCC said.
Of the mortgages that have been modified since the beginning of 2008, 50.8% of them remained current or had been paid off by the end of the second quarter. Another 8.8% were delinquent, 17.8% were seriously delinquent, 11% were in the process of foreclosure and 5.8% had completed the foreclosure process.
The report measures the performance of first-lien mortgages serviced by large national banks and thrifts, and covers about 62% of all such mortgages in the United States, worth about $5.6 trillion in outstanding balances.
