The performance of loans serviced by the seven national banks reporting to the Office of Comptroller of the Currency (OCC) improved during the first quarter of 2015. OCC's Mortgage Metrics Report collects data on the volume of modifications completed on first-lien residential mortgages hold by banks with large mortgage servicing portfolios. The report covers 38 percent of all first-lien residential mortgage debt outstanding in the United States.
The banks reporting were Bank of America, Citibank, HSBC, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo. The report's tables, however, cover a two-year period during which an eighth bank, CIT Bank/One West, was also reporting. Its absence from the current report may account for some of the noticeable shrinking of the aggregate portfolio.
As of March 31, 2016, the reporting banks serviced approximately 2.11 million first-lien mortgage loans with $3.63 trillion in unpaid principal balances. This is down by $50 billion from the previous quarter and from a total of $3.82 trillion in the 1st quarter of 2015 when there were 2.27 million loans being serviced. The number of loans in the banks' servicing portfolios has fallen steadily since the first quarter of 2014 when there were 2.45 million loans with an outstanding principal balance of $4.13 trillion. OCC said about 90 percent of the recent portfolio was being serviced for others.
Even as the volume of loans changed over the two years covered by the report, the composition of borrower risk has remained substantially unchanged.
OCC said that the overall performance of mortgages was relatively unchanged from the previous quarter but improved from a year earlier. The percentage of mortgages that were current and performing at the end of the first quarter of 2016 was 94.9 percent, compared with 94.2 percent a year earlier. The numbers of loans that were not performing, however, decreased more dramatically.
Servicers initiated 58,921 new foreclosures in the first quarter of 2016, a decrease of
7.0 percent from the previous quarter and 29.1 percent from a year earlier (see figure 7). Home forfeiture actions during the quarter--completed foreclosure sales, short sales, and deed-in-lieu-of-foreclosure actions--decreased 19.0 percent from a year earlier, to 38,429.
Servicers completed 34,481 modifications during the first quarter of 2016, 87 percent of which reduced the loans pre-modification monthly payment. Ninety-one percent or 31,450 of the modifications were what OCC called "combination modifications"-modifications that included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension. An additional 2,681 loan modifications received only a single action. Ninety-three percent of the combination modifications included capitalization of delinquent interest and fees, 81 percent included an interest rate reduction or freeze, 88 percent included a term extension, 8 percent had principal reduced, and 13 percent had principal deferred.
Modifications made during the third quarter of 2015 would have hit their six-month anniversary during the first quarter of 2016. Among modifications that were completed during the third quarter of 2015, (we could find no number in the report for that modification volume) servicers reported that 6,058 were 60 or more days past due or in the process of foreclosure at the end of the month that they became six months old.
