The Office of the Comptroller of the Currency (OCC) has reported on the performance of first-lien mortgages in the federal banking system during Q2 of 2023 through June 30, 2023.
The OCC Mortgage Metrics Report, Second Quarter 2023 [1] showed that 97.3% of mortgages included in the report were current and performing at the end of the second quarter, compared with 97.6% in the first quarter of 2023. Performance improved compared to the second quarter of 2022, when 97% of mortgages were current and performing.
For loans with forbearance activity covered by the Coronavirus Aid, Relief, and Economic Security (CARES) Act [2], reporting banks are following guidance from the U.S. Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), and the respective government agencies and government-sponsored enterprises (GSE) for the calculation and reporting of delinquency and credit bureau reporting.
The percentage of seriously delinquent mortgages–defined as mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due–was 1.1% in the second quarter of 2023, the same as the previous quarter, and a decrease compared to 1.5% a year ago.
Loan delinquencies are reported using the Mortgage Bankers Association (MBA) convention that a loan is past due when a scheduled payment has not been made by the due date of the following scheduled payment.
Mortgage servicers initiated 7,480 new foreclosures in the second quarter of 2023, a decrease from the prior quarter, and from a year earlier. The new foreclosure volume in Q2 2023 is lower than pre-COVID-19 pandemic foreclosure volumes.
Mortgage servicers also completed 8,623 loan modifications during the second quarter of 2023, a 16.9% drop from the previous quarter’s reported 10,375 loan modifications. Of the 8,623 loan modifications completed during the quarter, 4,372 (50.7%), reduced the loan’s pre-modification monthly payment, and 7,279 (84.4%), were “combination modifications”—modifications that included multiple actions affecting the affordability and sustainability of the loan, such as an interest rate reduction and a term extension.
The first-lien mortgages included in the OCC Mortgage Metrics Report, Second Quarter 2023 [1] comprise 22% of all residential mortgage debt outstanding in the U.S., or approximately 12 million loans totaling $2.8 trillion in principal balances.