Mortgage performance improved at national banks in 2021, but foreclosures ballooned

More than 96% of mortgages were current and performing at national banks and savings institutions at year-end 2021, up from about 93% a year earlier, their federal regulator said Tuesday.

Foreclosures, the regulator said, increased markedly in 2021

According to the Office of the Comptroller of the Currency (OCC), the increase in mortgage performance and currency – which rose to 96.4% at the end of last year, from 93.3% at year-end 2020 – was accompanied by a decrease in the percentage of “seriously delinquent mortgages,” which was 2.3% at the end of 2021. At year-end 2020, the number was 5.2%, the agency said.

However, the OCC reported that foreclosures increased 64% in 2021. The agency pointed to “events associated with the COVID-19 pandemic, including foreclosure moratoriums” as having “significantly affected these metrics.”

In other areas, the OCC reported:

  • Servicers initiated 1,294 new foreclosures in the fourth quarter of 2021, a 39.9% increase from the previous quarter.
  • 47,488 modifications of mortgages were made in the fourth quarter of 2021, an increase of 40.8% from the previous quarter. Of the 47,488 mortgage modifications, 70.5% reduced borrowers’ monthly payments, and 46,475, or 97.9%, were “combination modifications” – modifications that included multiple actions affecting the affordability and sustainability of the loan, such as an interest rate reduction and a term extension.
  • The first-lien mortgages included in the OCC’s quarterly report comprise 22% of all residential mortgage debt outstanding in the United States or approximately 12.3 million loans totaling $2.62 trillion in principal balances.

OCC Reports Improvement in Mortgage Performance for Fourth Quarter 2021