Foreclosure starts in the
second quarter of 2013 were down to half the level of a year earlier the Office
of Comptroller of the Currency (OCC) said on Thursday. There were 150,592 new foreclosures initiated
during the quarter, down 50.8 percent from the second quarter of 2012 and the
fewest in any quarter since early 2008.
OCC noted significant
improvements in most but not all measures of delinquency in its second quarter
Mortgage Metrics Report. The
report provides performance data on first-lien residential mortgages that
represent 52 percent of all those outstanding in the U.S; approximately 26.5
million loans with $4.5 trillion in unpaid principal balances.
economic conditions, aggressive foreclosure prevention assistance, regulatory
actions, and home forfeitures contributed to the improved performance, OCC
said. The metrics also improved due to
servicing transfers from the selected national banks and one federal savings
association included in the report. The
number of loans covered in the report has decreased 13.0 percent from a year
ago and 23.3 percent from the end of the second quarter in 2008. Principal balances are down 13.7 percent and
26.8 percent for the two periods. In
addition to transfers the decline in the portfolio also resulted from the
reduction of mortgage debt overall.
At the end of the
quarter 90.6 percent of all mortgages covered in the report were current and
performing compared to 90.2 percent at the end of the first quarter and 88.7
percent a year earlier. The 30+ day
delinquency rate was 2.9 percent, 11.6 percent higher than the previous quarter
and 1.8 percent above the rate a year earlier.
Delinquencies of 60 days or more decreased to 3.8 percent from 4.0
percent the previous quarter and 4.4 percent the prior year.
activity overall reached the lowest level since OCC initiated its report in the
first quarter of 2008. In addition to
the drop in starts, the number of loans in the process of foreclosure at the
end of the quarter declined 39.8 percent from the previous year to 744,369
loans. The number of completed
foreclosures fell 22.2 percent year-over-year to 79,960.
Performance of government
guaranteed mortgages, which comprised 24.6 percent of the serviced portfolio,
did not improve in the second quarter but did better than a year earlier. Current and performing loans represented 85.7
percent of the guaranteed portfolio compared to 86.2 in Q1 and 84.9 percent in
the second quarter of 2012. Seriously
delinquent mortgages in this part of the portfolio increased 0.5 percent from
the previous quarter to 6.2 percent.
Just over 57 percent of the portfolio were loans serviced
for Fannie Mae and Freddie Mac. Current
and performing loans were 95.1 percent of that portfolio, compared to 94.6 percent
in the first quarter and 93.7 percent a year earlier.
implemented more than twice as many home retention actions during the quarter
as home forfeiture actions. There were
314,672 loan modifications, trial-period plans, and shorter term payment plans
put in place during the quarter compared to 121,746 completed foreclosures,
short sales, and deeds-in-lieu. Still
the foreclosure prevention activities were down 9.8 percent from the first
quarter and 25.2 percent from a year earlier.
Loan modifications completed in each of the last five
quarters have performed similarly over time even though factors that can
influence their performance such as the average change in monthly payment, the
characteristics and geographic location of the loans and the addition or
deletion of modifications programs among reporting institutions have
Among modifications completed in each of the last five
quarters, 60 day delinquencies occurred at the following rate: Three months
after modification, between 5.8 and 7.7 percent; after six months, 11.5 to 14.2
percent; at 12 months, 16.9 to 20.9 percent.
Among modifications completed during the last five quarters, less than
16 percent were 90 or more days delinquent 12 months after modification. Loans
modified in the most recent four quarters appear to be re-defaulting at
materially lower rates than modifications completed in earlier quarters.
HAMP modifications have performed better than other modifications
implemented during the same periods perhaps because of HAMP's emphasis on the
affordability of monthly payments relative to the borrower's income,
verification of income, and completion of a successful trial-payment period.
While these criteria result in better performance of HAMP modifications over
time, the greater flexibility allowed through other types of modifications
results in more of those modifications for borrowers who do not qualify for