The performance of first-lien mortgages serviced by large national and federal savings banks continues to improve as a result of home retention efforts and home forfeiture actions.
Additionally, strengthening economic conditions and servicing transfers contributed to the improved performance of home mortgages, with 90.6% of mortgages considered current and performing at the end of the second quarter. That figure is up slightly from 90.2% at the end of the first quarter, and also up from 88.7% a year earlier, according to the Office of the Comptroller of the Currency.
Meanwhile, seriously delinquent mortgages — or those 60 or more days past due — decreased 3.8% this quarter, down from 4% last quarter and also a drop from 4.4% last year.
Foreclosure activity fell to its lowest level since the first quarter of 2008, decreasing 39.8% from a year ago, which is attributable to a reduction in the number of newly initiated foreclosures from last year and a drop in the number of significantly delinquent mortgages, the OCC pointed out.
The foreclosure pipeline is finally starting to unclog, impacting smaller default teams at mega servicers and more default outsourcing to special servicers, explained Statebridge Company president and CEO Kevin Kanouff.
"As far as the industry as whole, I think the foreclosure numbers are going down because of three things: home price appreciation leading to lower strategic defaults, more loss mitigation deals getting done and servicers churning through the foreclosure backlog," he said.
Meanwhile, servicers initiated 150,592 new foreclosures, down 50.8% from a year ago.
Various factors contributed to the reduction in foreclosure activity, including aggressive foreclosure prevention assistance, regulatory actions and the transfer of loans to servicers from banks. During the quarter, servicers implemented 314,672 home retention actions — modifications, trial-period plans and shorter-term payment plans, down 9.8% from the previous quarter and also down 25.2% from a year ago.
Additionally, 93% of modifications reduced monthly principal and interest payments, and 59.1% of modifications reduced payments by 20% in the second quarter.
Since the beginning of 2008 through the end of the first quarter of 2013, servicers have modified 3,180,522 mortgages, the OCC said.
During the second quarter, 46.6% of these modifications were paid off and another 6.1% were in the process of foreclosure, while 7.5% had completed the foreclosure process.
The mortgages in this portfolio represented 52% of all mortgages outstanding in the U.S., or 26.5 million loans totaling $4.5 trillion in principal balances.
On a similar note, Lender Processing Services pointed out that mortgage delinquencies and foreclosures continue to plummet across the nation, with the U.S. loan delinquency rate hitting 6.20% in August, down 10% from last year and 3.31% from a month earlier.