The Office of Comptroller of the Currency (OCC) reported today that 88.6 percent of the mortgages serviced by selected national federal savings banks were current and performing at the end of the third quarter.  The OCC Mortgage Metrics Report released this morning covers portfolios containing 29.8 million loans, 58 percent of all mortgages outstanding in the U.S, with $5.1 trillion in principal balances.  The percentage of performing mortgages declined by one tenth of one percent from 88.7 percent in the second quarter, but increased 0.7 percent from the same period a year ago.  

The early delinquency rate (30 to 59 days past due) increased 10.4 percent in the third quarter to 3.1 percent, 3.6 percent above the rate in the third quarter of 2011 while the percentage of mortgages that were 60 or more days past due or 30 days if the borrower was in bankruptcy, was unchanged quarter-over-quarter at 4.4 percent but was down 10.8 percent from a years earlier.

The report says foreclosure activity remains elevated as the large numbers of mortgages and foreclosures in process work through foreclosure prevention and loss mitigation processes. Servicers initiated 252,604 new foreclosures during the third quarter of 2012 a drop of 95,124 foreclosure starts than the same period a year earlier and a decrease of 16.5 percent from the previous quarter.   The number of mortgages in the foreclosure process declined by 167,730 loans from a year ago to 1,158,289-a decrease of 6.4 percent from the previous quarter and 12.6 percent from a year earlier. The number of completed foreclosures rose to 114,742, a 12.8 percent increase from the previous quarter and a 1.3 percent increase from a year earlier.

The percentage of current and performing government-guaranteed mortgages, which comprise almost one-quarter of the portfolio, declined in the third quarter from 84.9 percent in the second quarter to 84.3 percent.  In the third quarter of 2011 85.2 percent of these mortgages were current and performing.

Mortgages serviced for the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac made up 58 percent of the mortgages in this report.  Current and performing loans made up 93.6 percent of the GSEs' portfolios, a -.04 change from the second quarter and -0.06 from a year earlier. 

There were 382,899 home retention actions initiated by servicers in the third quarter, 8.9 percent fewer than in the second quarter and 16.6 percent less than one year earlier.  These actions included modifications and shorter-term payment plans.  This was more than double the 180,389 home forfeiture actions initiated during the quarter.  Home forfeitures increased 7.7 percent from the second quarter and 4.0 percent from one year earlier; Completed foreclosures increased by 12.8 percent from Q2 and 1.3 percent from a year earlier and short sales by 0.7 percent and 11.1 percent respectively.

Home Affordable Modification Program (HAMP) modifications increased 10.0 percent from the previous quarter to 31,540 but decreased 41.5 percent from a year earlier.  Other modifications increased to 104,776-an increase of 54.2 percent and 25.3 percent respectively.  HAMP trial-period plans decreased by 13.7 percent from the previous quarter and 25.1 percent from the previous year.  Other trial-period plans decreased 38.7 percent from the previous quarter and 14.2 percent from a year earlier.

Servicers reduced interest rates in 77.2 percent of all modifications made during the third quarter of 2012 and extended terms in 64.8 percent.  There were principal deferrals in 19.1 percent, and principal reductions in 17.1 percent.   Modifications resulted in reduced monthly mortgage payments for nearly 90 percent of affected borrowers.

Foreclosure starts decreased 16.5 percent quarter over quarter and 27.4 percent year over year.  The number of foreclosures in process decreased 6.4 percent and 12.6 percent respectively.  OCC said these numbers reflect a strengthening economy, a declining number of serious delinquencies, and an emphasis on alternatives to foreclosure.