Mortgage delinquencies remain mixed

by The City Wire staff ([email protected]) 45 views 

The percentage of first-lien non-FHA mortgages that were current at the end of the first quarter of 2012 increased to the highest levels in three years, according to a report published last week by the Office of the Comptroller of the Currency.

The OCC Mortgage Metrics Report for the First Quarter of 2012 showed percentages of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the OCC began publishing its report on mortgage performance in first quarter of 2008.

The improvement in mortgage performance can be attributed to several factors, including strengthening economic conditions during the quarter, seasonal effects, servicing transfers, and the ongoing effects of home retention programs as well as home forfeiture actions.

But that’s not the case for mortgages guaranteed by the Federal Housing Administration that are seeing rising delinquency challenges.

The share of FHA loans that were 90 days or more delinquent soared nearly 27% during the year ending March 31. Foreclosures jumped nearly 17%, according to a report published recently by federal regulators.

FHA has also had a tougher time successfully modifying loans. More than 48% of government-guaranteed mortgages re-defaulted 12 months after modification, compared to 36.2% of loans overall, the report said.

Analsyts say as the economy slowed in the second quarter, the delinquency numbers could tick up with the next report.

The large number of delinquent loans continues to work through the loss mitigation process.

Servicers have modified 2.543 million mortgages from the beginning of 2008 through the end of the fourth quarter of 2011. At the end of the first quarter of 2012, 50.7% of these modifications remained current or were paid off among non-FHA loans.

Modifications made during that period that reduced borrower monthly payments by 10% or more performed better than those that reduced payments by less. At the end of the first quarter of 2012, 57.9% of modifications that reduced payments by 10% or more were current and performing, compared with 36.8% of those that reduced payments by less.

On average modifications implemented in the first quarter of 2012 reduced monthly principal and interest payments by $437, which is 31% more than modifications implemented during the first quarter of 2011. The Home Affordable Modification Program (HAMP) reduced payments by $588 on average.

The report covers 31 million first-lien mortgages worth $5.3 trillion in outstanding balances, about 60% of all first-lien mortgages in the United States.

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