The performance of first-lien mortgages serviced by large national banks and federal savings associations declined slightly during the second quarter, according to a report released by the Office of the Comptroller of the Currency (OCC).
The quarterly OCC Mortgage Metrics Report showed that 88% of the 32.7 million loans in the portfolio were current and performing at the end of the second quarter, down from 88.6% at the end of the first quarter, but up from 87.3% a year earlier. The OCC says that the decline in portfolio quality is mainly attributable to an increase in early-stage delinquencies – mortgages 30-to-59 days delinquent – that increased 0.4% from the previous quarter to represent 3% of the servicing portfolio.
The percentage of mortgages that were seriously delinquent, as well as mortgages that were 60 or more days delinquent and delinquent mortgages to bankrupt borrowers, increased slightly to 4.9% of the portfolio from 4.8% in the first quarter, after decreasing during each of the previous five quarters. While early stage delinquencies and serious delinquencies both increased from the previous quarter, they decreased from a year earlier.
The percentage of mortgages that were in the process of foreclosure remained steady at 4% of the mortgages serviced by the reporting banks and savings associations. Although completed foreclosures decreased by more than 30% from a year earlier and increased only 1.2% from the previous quarter, completed foreclosures may continue to increase in future quarters as a large number of foreclosures work through the process and alternatives to foreclosure are exhausted.
Mortgage servicers continued to seek alternatives to foreclosure for delinquent borrowers in the second quarter, implementing 456,397 home-retention actions compared with 287,145 new foreclosure proceedings. Although modifications under the Home Affordable Modification Program increased by 31.6% during the quarter, other home-retention actions declined, causing an overall decrease of 18.1% in new modification actions from the previous quarter.
The OCC report is now online.Â