The performance of first-lien mortgages serviced by large national banks and federal thrifts improved during the first quarter of 2011, according to a report released by major federal banking regulators.
The quarterly report by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) showed that 88.6% of the 32.7 million loans in the portfolio were current and performing at the end of the first quarter of 2011. That was up from 87.6% at the end of the fourth quarter of 2010 and 87.3% in the year-ago period.
While the report said delinquencies and foreclosures remained elevated from historic norms, delinquencies improved across all risk categories and for all investors. Mortgages that were 30–59 days delinquent fell to 2.6% 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% of the portfolio, the lowest level since the first quarter of 2009.
The OCC and OTS Mortgage Metrics Report, First Quarter 2011, available at tinyurl.com/3uw6a5r, covers about 63% of all first-lien mortgages in the United States, worth $5.7 trillion in outstanding balances.
The report said a large inventory of seriously delinquent mortgages and foreclosures in process continued to work through the loss mitigation and foreclosure process. Servicers implemented 557,451 home retention actions (17.4% more than the previous quarter) to mitigate risk and assist homeowners struggling with mortgages. Driving that increase was a 78% rise in trial-period plans. Permanent modifications fell during the first quarter of 2011, reflecting the lower number of trial-period plans in the third and fourth quarters of 2010 that would be maturing during the first quarter of 2011.
The report said the number of mortgages entering the foreclosure process fell to 312,404—down 11.3% from the previous quarter and 15.6% from a year ago. The number of mortgages in the process of foreclosure fell slightly, but the overall portion of mortgages in the process of foreclosure remained unchanged from the previous quarter at 4%. The number of mortgages that completed the foreclosure process rose by 26% from the previous quarter but dropped 27.7% from a year ago, as servicers lifted voluntary moratoriums on foreclosures that were in place during the previous quarters.
New in this report are data on the performance of mortgages held by the reporting national banks and federal thrifts. Because most of the loans tend to be nonconforming loans with increased risk characteristics and geographic concentration in weaker real estate markets, mortgages held by reporting banks and thrifts perform worse than mortgages serviced for others. The report said that 80.3% of mortgages held by reporting banks and thrifts were current and performing at the end of the quarter, compared with 88.6% of all reported mortgages. Reporting banks and thrifts hold 14.5% of the mortgages included in the report.
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