National Banks Report Improving Loan Performance

Another measure of returning normalcy came on Thursday with a report from the Office of Comptroller of the Currency (OCC) on mortgage loan performance.  The regulator said that 94.2 percent of the first mortgages serviced by eight large national banks it regulates were current and performing in the first quarter of 2015.  This is an increase from 93.1 percent in the first quarter of 2014. The mortgages in this portfolio comprise 43.9 percent of all residential mortgages outstanding in the United States-22.7 million loans totaling $3.8 trillion in principal balances.

Loans in early stage delinquency - 30 to 59 days past due - represented 1.9 percent of the total, a 7 percent decrease from a year earlier.  There was a more substantial year-over-year improvement in the percentage of loans that were 60 or more days past due or held by borrowers more than 30 days past due and in bankruptcy, down 16.4 percent to a 2.6 percent rate.

Servicers reported that their foreclosure inventories, loans in the process of foreclosure at the end of the quarter, decreased by 30.8 percent from the previous year to 299,424 loans, a rate of 1.3 percent.   There were 83,058 loans put into the foreclosure process, down 8.6 percent from the first quarter of 2014, and completed foreclosures decreased 31.5 percent to 38,509. 

Foreclosures, short sales, and deeds-in-lieu of foreclosure resulted in 47,430 home forfeitures compared to 188,816 home retention actions implemented during the quarter.  These included loan modifications, trial-period plans, and shorter-term payment plans. The number of home retention actions implemented by servicers was down 20.6 percent from a year earlier. 

OCC said that between January 1, 2008 and December 31, 2014 servicers for the eight banks implemented 3.70 million loan modifications and approximately 1.97 million or 53 percent remained active through the end of Q1 2015.  Of these, 72.2 percent were current and performing, 22.4 percent were delinquent, and 5.5 percent were in the process of foreclosure.  The other 47 percent had exited from servicers' portfolios through payoffs, involuntary liquidation, or transfer to another servicer.