Mortgage Delinquencies Fall to Three-Year Low

The percentage of first-lien mortgages that were current and performing at the end of the first quarter of 2012 increased to the highest levels in three years, according to a report published today by the Office of the Comptroller of the Currency.

The OCC Mortgage Metrics Report for the First Quarter of 2012 showed percentages of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the OCC began publishing its report on mortgage performance in first quarter of 2008. The improvement in mortgage performance can be attributed to several factors, including strengthening economic conditions during the quarter, seasonal effects, servicing transfers, and the ongoing effects of home retention programs as well as home forfeiture actions.

The large number of delinquent loans continues to work through the loss mitigation process. Servicers initiated 352,989 new home retention actions—modifications, trial-period plans, and payment plans. During the past five quarters, servicers initiated more than 2.2 million home retention actions. Completed foreclosures increased to 122,979—up 5.9 percent from the previous quarter and 2.7 percent from the first quarter of 2011. However, the number of new foreclosures initiated during the quarter decreased to 286,951—down 1.8 percent from the previous quarter. The inventory of foreclosures in process increased from the previous quarter to 1,269,921, but is down from 1,308,757 a year ago.

Servicers have modified 2,543,133 mortgages from the beginning of 2008 through the end of the fourth quarter of 2011. At the end of the first quarter of 2012, 50.7 percent of these modifications remained current or were paid off. Modifications made during that period that reduced borrower monthly payments by 10 percent or more performed better than those that reduced payments by less than 10 percent—the greater the payment decrease, the better the subsequent performance. At the end of the first quarter of 2012, 57.9 percent of modifications that reduced payments by 10 percent or more were current and performing, compared with 36.8 percent of those that reduced payments by less.

On average modifications implemented in the first quarter of 2012 reduced monthly principal and interest payments by $437, which is 31 percent more than modifications implemented during the first quarter of 2011. HAMP modification reduced payments by $588 on average.

The report covers 31 million first-lien mortgages worth $5.3 trillion in outstanding balances, about 60 percent of all first-lien mortgages in the United States.

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