OCC Reports Q2 Findings on Loan Performance and Mods

Mortgage performance for loans serviced by large national and federal savings banks weakened in the second quarter of 2012, the ""Office of the Comptroller of the Currency"":http://www.occ.gov (OCC) reported Thursday.

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The percentage of current and performing mortgages stood at 88.7 percent at the end of Q2, a slight drop from Q1, when 88.9 percent of loans were current and performing.

Loan performance in Q2 was still better the same quarter in 2011, when 88.1 percent of loans were categorized as current and performing.

The report covers about 60 percent of all first-lien mortgages in the U.S., or 30.5 million first-lien mortgages, totaling $5.2 trillion in outstanding balances.

The share of mortgages past due 30-59 days was 2.8 percent, a 12.1 percent quarterly increase, but a 7.5 percent drop from a year ago.

On the other hand, seriously delinquent mortgages, which are those that are 60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due, fell 0.8 percent from Q1 to 4.4 percent, the lowest level in three years.

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Year-over-year, the rate of seriously delinquent mortgages dropped 9.2 percent.

Home retention actions from servicers exceeded foreclosure starts, with servicers implementing 416,036 new home retention actions during the second quarter, compared to 302,636 new foreclosures.

New home retention actions increased quarterly by 17.9 percent, but declined 8.8 percent year-over-year.

Monthly principal and interest payments were reduced for 90.4 percent of modified loans, saving borrowers an average of $381 a month. HAMP mods, however, provided greater savings for borrowers, $576 (35.3 percent reduction) on average, while other mods reduced payments by $295 (19.9 percent reduction) on average.

HAMP mods performed better than other mods, with 64.8 percent of HAMP mods since the third quarter of 2009 still current, compared to 50.7 percent of other mods implemented during the same time period.

According to the report, loans that receive HAMP mods perform better because of the emphasis on lower monthly payments, affordability relative to borrower income, require income verification, and the successful require trial period.

The report also revealed principal reductions were applied to 11.4 percent of modified loans.

Overall, since the beginning of 2008, servicers have modified 2,645,290 mortgages through the end of the first quarter of 2012.

As of the end of Q2, 48.6 percent of the modified loans remained current or were paid off; 7.6 percent became 30 to 59 days delinquent; and 14.9 percent rolled into serious delinquency status.

In addition, 10.5 percent are in the foreclosure process, and 6.5 percent became completed foreclosures.