Little Change in Quarterly Performance of Loans, OCC Reports

Overall, little change was reported in the performance of first-lien mortgages serviced by national and federal savings banks during the 2011 fourth quarter, but the percentage of initiated foreclosures did see a steep drop, according to the Office of Comptroller of the Currency (OCC) ""Mortgage Metrics report"":http://www.occ.gov/news-issuances/news-releases/2012/nr-occ-2012-55a.pdf.

[IMAGE]

The percentage of current and performing loans decreased to 87.9 percent, a mere 0.1 percentage point drop from the previous quarter, but a 0.4 percent increase compared to the same period a year ago.

The number of newly initiated foreclosures dropped 16 percent from the previous quarter and 17.9 percent a year ago. According to the report, the decrease in new foreclosures reflects the continued emphasis on home retention actions, a decrease in the number of seriously delinquent loans over the past few quarters, and the effects of foreclosure settlements.

The inventory of foreclosures in process decreased to 1,272,287, down 4.1 percent from the previous quarter and 3.1 percent from a year ago.

The number of completed foreclosures increased by 2.5 percent from the previous quarter and 22.1 percent a year earlier.

Seriously delinquent mortgages, loans past due 60 days or more and bankruptcies 30 or more days past due, went up a smidge, going from 4.9 percent to 5 percent during the fourth quarter, but down from the 5.3 percent a year ago.

The number of mortgages that were 30 to 59 days delinquent decreased by 2.1 percent from the previous quarter, and the number early-stage delinquencies decreased by 6.7 percent from a year ago.

[COLUMN_BREAK]

Fannie Mae and Freddie Mac mortgages made up 59 percent of the overall portfolio, down from 61 percent last year. The percentage of GSE mortgages that were current and performing at the fourth quarter's end was 93.1 percent, unchanged from the previous quarter and up from prior year's 92.6 percent.

The performance of government-guaranteed mortgages fell, with 84.2 percent of these loans current and performing, compared to 85.2 percent at the end of the third quarter and 85 percent a year ago. More than 79 percent of these loans were comprised of FHA loans and 15 percent were VA loans.

The portfolio performance of reporting banks and thrifts remained almost unchanged from the previous quarter at 87.9 percent, which is only a 0.1 percent drop, but a 0.4 percent increase compared to last year.

*Home retention actions*

Servicers implemented 460,213 new home retention actions-loan modifications, trial-period plans, and payment plans-during the fourth quarter of 2011, which is a 0.3 percent increase compared to the previous quarter, but 3.1 percent drop from last year.

Servicers implemented 116,153 modifications during the quarter, a 15.5 percent drop from the previous quarter. New HAMP modifications decreased 21.6 percent to 42,275 during the fourth quarter, and other modifications decreased 11.6 percent to 73,878. Almost 47 percent of all HAMP modifications during the fourth quarter were GSE loans.

Servicers have modified 2,395,565 mortgages since the beginning of 2008 to the end of the third quarter of 2011. At the end of the 2011 fourth quarter, 48.3 percent of those modifications remained current or had been paid off, 8.5 percent were 30 to 59 days delinquent, and 17.4 percent were seriously delinquent. In addition, 10.6 percent were in the process of foreclosure and 6.1 percent completed the foreclosure process.
On average, non-HAMP mods reduced monthly payments by 26.5 percent during the fourth quarter or $430, and HAMP mods reduced payments by 36 percent, or $593.

Modifications that reduced payments by 10 percent or more performed better than those with a lesser reduction. At the end of the 2011 fourth quarter, 55.4 percent of modifications made since the beginning of 2008 with payments reduced by 10 percent or more were current and performing, compared to 34.5 percent of modifications made during that time that reduced payments by less than 10 percent.