Mortgage performance improves, but foreclosures shoot way up at national banks

Mortgage performance improved at national banks by the end of the third quarter – but foreclosures at the financial institutions jumped by more than 150%, according to results released Friday by the national bank regulator.

In its Mortgage Metrics Report for the third quarter 2021, the Office of the Comptroller of the Currency (OCC) said 95.6% of mortgages at banks were reported as current and performing, compared with 92.5% at the end of the same period a year earlier.

However, foreclosures have jumped significantly, the agency reported: they are up 150.7% from a year earlier, and up 56.3% from the previous quarter. There were 925 new foreclosures during the third quarter of 2021, the agency added. The COVID-19 pandemic, including foreclosure moratoriums, have significantly affected those metrics, the agency stated.

Mortgages that are seriously delinquent (60 days or more past due) had fallen to 3.1% from 5.8% a year earlier (and from 3.8% the prior quarter), the OCC said. The numbers also include those mortgages held by bankrupt borrowers whose payments are 30 or more days past due.

Meanwhile, 33,721 mortgage modifications were completed by servicers in the third quarter of 2021, a decrease of 14.8% from the previous quarter, the OCC said. Of the mortgage modifications, 59.6% reduced borrowers’ monthly payments and 98.3% were “combination modifications” that included multiple actions affecting affordability and sustainability of the loan, such as an interest-rate reduction and a term extension, the agency stated.

First-lien mortgages at the banks covered by the report account for 23% of all residential mortgage debt outstanding, the OCC noted – about 12.5 million loans totaling $2.59 trillion in principal balances.

OCC Reports Improvement in Mortgage Performance