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Regulators Report Performance of Serviced Mortgages Is Improving

The performance of first-lien mortgages serviced by large national banks and federal thrifts improved during the first quarter as a large number of troubled loans worked their way through the system, according to a ""report released Wednesday"":http://www.occ.gov/publications/publications-by-type/other-publications/mortgage-metrics-q1-2011/mortgage-metrics-q1-2011.pdf by federal regulators.
[IMAGE] The quarterly study issued by the ""Office of the Comptroller of the Currency"":http://www.occ.gov (OCC) and the ""Office of Thrift Supervision"":http://www.ots.treas.gov/ (OTS) showed that 88.6 percent of the 32.7 million loans in the portfolio were current and performing at the end of the first quarter of 2011.

That translates to 3.7 million mortgages serviced by the lenders the two agencies regulate that are going unpaid.

The mortgages in the collective servicing portfolio examined by the regulators comprise 63 percent of all mortgages outstanding in the United States â€" 32.7 million loans totaling nearly $5.7 trillion in principal balances. (It does not include loans in securities pools serviced for private investors.)

Their analysis found that loans serviced for government agencies and the GSEs are outperforming those held by banks and thrifts on their own books.

As of the end of March, 80.3 percent of the 4.7 million mortgages held by reporting banks and thrifts were current.

Among the 6.6 million loans in the subject portfolio serviced for federal agencies, including the Federal Housing Administration and the Department of Veterans Affairs, 87.0 percent were current.

Of the 20 million Fannie and Freddie loans serviced by the reporting banks and thrifts, 93.2 percent were current.


According to the OCC-OTS report, GSE mortgages perform better than the overall portfolio because they have a greater percentage of prime loans.

While delinquencies and foreclosures across the board remained elevated from historic norms, the regulators say past-due percentages improved across all risk categories and for all asset owners, while newly started foreclosures declined sharply.

Mortgages that were 30-59 days delinquent fell to 2.6 percent of the portfolio, the lowest level in three years.

Mortgages more than 60 days past due and delinquent loans to bankrupt borrowers declined for the fifth consecutive quarter to 4.8 percent of the portfolio, hitting their lowest mark since the first quarter of 2009.

The regulators say more troubled loans were resolved, either through loss mitigation or foreclosure, and they stressed that servicers continued to emphasize alternatives to foreclosure, initiating more than three times as many new home retention actions as completed foreclosures, short sales, and deeds-in-lieu.

Servicers implemented 557,451 home retention actions, 17.4 percent more than the previous quarter. Driving that increase was a 78 percent rise in trial-period modification plans.

Permanent mods fell during the first quarter of 2011. According to the report, the decline reflects the lower number of trials in the third and fourth quarters of 2010 that would be maturing during the first quarter of 2011.

The number of mortgages entering the foreclosure process dropped to 312,404. That’s down 11.3 percent from the previous quarter and 15.6 percent from a year ago. The portion of mortgages in foreclosure was 4 percent.

Completed foreclosures rose by 26 percent from the previous quarter but dropped 27.7 percent from a year ago, as servicers lifted voluntary moratoria on foreclosures that were in place during the previous quarters. Foreclosure completions totaled nearly 119,809 during the first three months of this year.

Short sales tallied 50,109, while 1,700 homes were relinquished through a deed-in-lieu of foreclosure.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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