OCC reports surge in 'seriously delinquent' mortgages
WASHINGTON — An Office of the Comptroller of the Currency report suggested notable stress on credit quality in the mortgage portfolios of the nation's largest banks resulting from the COVID-19 pandemic.
The agency's second-quarter Mortgage Metrics said the performance of residential loans at seven banks with significant servicing portfolios had declined last quarter. Overall, 91.1% of first-lien mortgages were current and performing, which was down from 96.1% during the same period last year.
The decline was driven by a sharp jump in mortgages that banks reported as “seriously delinquent,” defined as more than 60 days overdue. The percentage of seriously delinquent mortgages jumped to 6.8% in the second quarter from 1.4% in the first quarter.
In the report, the OCC said that “seriously delinquent loans have increased as a result of the pandemic.”
At the same time, foreclosures remain unusually low as a result of the national moratorium in place since the early months of the COVID-19 pandemic. The OCC reported that its surveyed banks initiated foreclosures only 249 times in the second quarter of 2020, compared with nearly 20,000 in the first quarter — a drop of 98.7%.
The OCC estimates that the mortgage portfolios of national banks in its study represent $2.97 trillion in unpaid principal balances, or 28% of the nation’s outstanding residential mortgage debt.