Eight national banks saw the performance of their first-lien mortgages improve in the fourth quarter of 2014, while the delinquency rate on those mortgages and the foreclosure activity continued to decline, according to a quarterly report on mortgage performance by the Office of the Comptroller of the Currency (OCC) released Friday.
The eight banks examined in the OCC Mortgage Metrics Report, Fourth Quarter 2014 were Bank of America, JPMorgan Chase, Citibank, HSBC, OneWest Bank, PNC, U.S. Bank, and Wells Fargo. The mortgages covered in the report comprised about 45 percent of all outstanding residential mortgages in the United States - about 23.1 million mortgages with principal balances totaling about $3.9 trillion as of December 31, 2014.
According to the report, 93.2 percent of first-lien mortgages in the portfolios of those banks were current and performing at the end of the fourth quarter, up from 93.0 percent in Q3 and 91.8 percent from Q4 2013. Delinquent mortgage loans that were 30 to 59 days past due made up 2.4 percent of the loans at the eight banks in Q4, according to the OCC report, which was a decline of 9.4 percent from the same quarter a year earlier. The percentage of seriously delinquent mortgage loans, which are those 60 days or more past due or held by borrowers in bankruptcy whose payments are 30 days or more past due, was 3.1 percent in Q4 – a decline of 0.9 percent from the previous quarter and 12.2 percent year-over-year, according to the OCC.
Foreclosure inventory, which is the number of properties in some state of foreclosure, dropped by 39.7 percent year-over-year in Q4 down to 315,022 (1.4 percent of mortgages). Foreclosure starts, or the number of foreclosures initiated by servicers, fell year-over-year by 39.4 percent down to 75,395. Completed foreclosures, which are a true representation of the number of homes lost to foreclosure, declined by 35.3 percent down to 39,331 during the quarter.
The number of home retention actions implemented by servicers in the fourth quarter outpaced home forfeiture actions by a ratio of nearly four to one. Home retention actions, which included modifications, trial period plans, and shorter-term payment plans, totaled 195,577 in Q4 (a year-over-year decline of 19.5 percent) compared to 49,749 home forfeiture actions (completed foreclosures, short sales, and deeds-in-lieu of foreclosure).
More than 88 percent of modifications in Q4 reduced monthly principal and interest payments; 52 percent of those reduced payments by more than 20 percent. The average monthly payment reduction for modifications was $243; for mods completed under the government's Home Affordable Modification program (HAMP) averaged a higher monthly payment reduction ($274).
Out of the 3.65 million modifications implemented by servicers from January 1, 2008 through September 30, 2014, 55 percent of them (about 2.01 million) were active at the end of Q4; the other 45 percent had exited the portfolio through either payment of the loan in full or involuntary liquidation, or through the transferring of the loan to a servicer that did not report its loans as part of the portfolio. About 68.8 percent of the active modifications were current at the end of Q4 2014; about one-quarter (25.8 percent) were current, and 5.4 percent of the active modifications were in the process of foreclosure as of the end of Q4.