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First-Lien Mortgage Performance Improves While Foreclosure Metrics Decline

mixed-numbersFirst-lien mortgage performance continued to improve with nearly a full percentage point increase in the share of mortgages that were current and performing at the end of Q2 2015, according to the quarterly report on mortgage performance released by the Office of the Comptroller of the Currency (OCC).

According to the OCC Mortgage Metrics Report, Second Quarter 2015, 93.8 percent of first-lien mortgages for eight national banks were current and performing as of the end of Q2—a year-over-year increase from 92.9 percent reported from the same quarter a year ago. The eight national banks examined in the report are Bank of America, JPMorgan Chase, Citibank, HSBC, OneWest Bank, PNC, U.S. Bank, and Wells Fargo.

While the share of current and performing mortgages increased, both seriously delinquent mortgages (those 60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due) and foreclosures declined year-over-year in Q2. Seriously delinquent mortgages accounted for about 2.6 percent of the portfolio as of the end of the quarter, which is a decline of 16 percent from Q2 2014.

The number of mortgages in the process of foreclosure as of the end of Q2 2015 declined by nearly one-quarter from the same quarter the previous year. As of the end of Q2, 2015, there were about 299,500 homes in the process of foreclosure, which is a decline of 23.5 percent from a year earlier.  The nearly 300,000 homes in foreclosure represented about 1.4 percent of mortgages in the portfolio.

10-5 OCC graph 1

Foreclosure starts and foreclosure completions were also down over the year, according to the OCC. Servicers initiated 70,728 foreclosures during Q2, which was down from 11.3 percent in the same quarter in 2014. Completed foreclosures during Q2 totaled 37,725, which was a drop of 23.4 percent from a year earlier.

"Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity," the OCC said in its report.

Servicers completed 179,382 home retention actions during the second quarter, which included modifications, trial-period plans, and shorter term-payment plans. According to the OCC, more than 86 percent of those modifications reduced monthly principal and interest payments, and 52 percent of them reduced monthly payments by 20 percent or more (average monthly payment reduction amount was $245).

The mortgages in the portfolio for the eight banks comprised 43 percent of outstanding residential mortgages in the country, which computes to about 22.1 million loans with about $3.8 trillion in unpaid principal balance.

To view the complete report, click here.

10-5 OCC graph 2

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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