The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) are expanding the scope of the mortgage performance data gathered from national banks and thrifts to include additional information on the affordability and sustainability of loan modifications.
The additional data will show how loan modifications changed the total amount of borrowers' monthly principal and interest payments in 2008. The State Foreclosure Prevention Working Group, which is composed of state attorneys general and bank regulators, had criticized the data collected for the OCC and OTS' most recent Mortgage Metrics Report that found a high recidivism rate for modified loans.
The next edition of the agencies' joint Mortgage Metrics Report, scheduled for release in March, will incorporate the working group's suggestions and review categories of loan modifications that increased borrowers' monthly principal and interest payments, brought no change to payments, reduced payments by 10% or less, or reduced payments by more than 10%.
Importantly, for loans modified in the first and second quarters of 2008, the report will show the percentage of modifications in each of the four categories that are 60 or more days past due at six months after modification. This will help gauge the effectiveness of the four categories of changes in monthly payments in making mortgages more sustainable and in keeping borrowers in their homes.
Future reports covering all of 2008 and subsequent periods will also show trends in the types of modifications undertaken by loan servicers.
"This is important information on banks' efforts to modify loans and will help inform lenders and policy-makers as to what type of modifications work, with a particular focus on the effect of significant changes in monthly payments," says Comptroller of the Currency John C. Dugan.
OTS Director John Reich describes the expanded data collection effort as fulfilling a pledge, saying the announcement "marks a meaningful milestone."
SOURCES: OCC, OTS