Mortgage Performance Improves Across the Board For Eight National Banks Team Thayer Real Estate News
Approximately 94.2 percent of first-lien mortgages serviced by eight national banks were current and performing at the end of the first quarter, an improvement of more than a full percentage point from a year earlier, according to the Office of the Comptroller of the Currency's Q1 2015 Quarterly Mortgage Metrics Report released Thursday.
The eight national banks covered in the OCC's report are (alphabetically) Bank of America, JPMorgan Chase, Citibank, HSBC, OneWest Bank, PNC, U.S. Bank, and Wells Fargo. The mortgages covered in the OCC's report comprised 43.9 percent of all outstanding residential mortgages in the country, which total 22.7 million loans and approximately $3.8 trillion in unpaid principal balance.
Mortgage performance improved across the board for the eight national banks in Q1. The share of performing first-lien mortgages improved from 93.1 percent up to 94.2 percent, the share of mortgages that were 30 to 59 days overdue declined by 7 percent year-over-year in Q1 down to 1.9 percent, and seriously delinquent mortgages (60 or more days overdue or held by bankrupt borrowers who are more than 30 days past due on their payments) made up 2.6 percent of the portfolio in Q1, a year-over-year decline by 16.4 percent, according to OCC.
Foreclosure activity declined substantially year-over-year in Q1. The number of properties in the process of foreclosure as of the end of the quarter dropped down to 299,424, a decline of 30.8 percent from the same quarter a year earlier. The nearly 300,000 loans in the process of foreclosure during Q1 comprised about 1.3 percent of the loans in the portfolio. Foreclosure starts declined year-over-year by 8.6 percent in Q1, down to 83,058, while foreclosure completions dropped by 31.5 percent year-over-year down to 38,509. The OCC cites improved economic conditions and foreclosure prevention actions as the reason for the substantial decline in foreclosure activity during Q1.
Home retention actions such as modifications, trial-period plans, and shorter-term payment plans totaled 188,816 in Q1, a decline of 20.6 from the same quarter a year earlier. More than 89 percent of loan modifications reduced monthly principal and interest payments, and more than 55 percent of modifications reduced monthly payments by 20 percent or more. Borrowers saved an average of $271 per month on mortgage payments with modifications in Q1, according to OCC. Meanwhile, home forfeiture actions such as completed foreclosures, short sales, and deeds-in-lieu of foreclosure totaled 47,430 during the quarter.
According to OCC, out of the nearly 3.7 million modifications implemented from a seven-year period from January 1, 2008 through December 31, 2014, approximately 53 percent of them were active as of the end of Q1 2015 while 47 percent of them had exited the portfolio through either payment in full of the mortgage, involuntary liquidation, or a transfer to a servicer that was not part of the portfolio. Out of those 53 percent of active modifications at the end of Q1, totaling approximately 1.97 million mortgages, 72.2 percent of them were current and performing, 22.4 percent of the loans were delinquent, and 5.5 percent of them were in the process of foreclosure, the OCC reported.
Justin Lee Thayer is Lane counties expert in market analysis for real estate investors. Call Justin @ 541-543-7287