National bank and thrift servicers implemented more than 680,000 home-loan modifications and payment plans in the third quarter, according to a report released by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).
The OCC and OTS Mortgage Metrics Report for the Third Quarter 2009 showed that the number represented a nearly 69% increase in home retention actions from the previous quarter.
Despite progress in this area, the percentage of current and performing mortgages dropped for the sixth consecutive quarter to 87% of the servicing portfolio, serious delinquencies rose to 6.2% and foreclosures in process surpassed 1 million mortgages, or about 3.2% of the servicing portfolio.
Of particular note was the deterioration among prime mortgages – the largest category of mortgages. Serious delinquencies at the end of the third quarter increased to 3.6% of prime mortgages – up almost 20% from the previous quarter and more than double a year ago.
Although the volume of home-retention actions increased in the third quarter and the most recent vintage of loan modifications had lower early redefault rates than older vintages, modified loans continued to re-default at high rates overall. More than half of all modified loans redefaulted within six months of modification, with re-default defined as 60 or more days delinquent or in foreclosure.
Servicers implemented almost 274,000 trial plans under the Home Affordable Modification Program (HAMP) during the quarter. They also assisted homeowners by providing more than 406,000 other home-retention actions outside of HAMP that required no taxpayer-supported incentives.
Servicers implemented nearly twice as many home-retention actions as new foreclosures and, for every two homes lost in foreclosure sales, servicers provided opportunities for nine other families to keep their homes through new home-retention actions.
More than 80% of the loan modifications in the third quarter reduced monthly principal and interest payments.
The complete report, in PDF form, is available for download.