Federal Study: More Banks Modify Problem Home Loans in Q2
Saturday, September 27, 2008
Top U.S. financial institutions tried harder in the second quarter to modify problem loans, according to a recent report by federal agencies. The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) have issued a joint mortgage metrics report, in which they found that actions by national banks and thrifts to prevent home mortgage foreclosures increased faster than their new foreclosures during the second quarter of 2008, despite an overall decline in mortgage credit quality.
Lenders modified 112,353 first-lien mortgages, an increase of 56 percent from the previous quarter, according to OCC and OTS data. Meanwhile, new foreclosures rose to 288,740 in the second quarter, from 278,857 the previous quarter.
The combined report, which replaces separate studies by the two agencies, represents approximately 60 percent of all mortgages outstanding in the United States. At the end of the second quarter, the 14 national banks and thrifts covered in the report serviced more than 34.7 million first-lien mortgage loans, totaling $6.1 trillion.
“As banks continue to work through this portion of the credit cycle, we are watching closely to ensure they have safe and sound risk management strategies in place,” said Comptroller of the Currency John C. Dugan. “Producing this report jointly with the OTS helps to provide a more transparent and systemic view of mortgage performance within federally regulated banks and thrifts to examiners and the public.”
OTS Director John Reich pointed to the increase in foreclosure prevention actions as a positive development. “This joint report provides valuable insights never previously available. It shows that the trend is definitely moving in the right direction to minimize the number of avoidable foreclosures and keep more Americans in their homes,” Reich said. “As we move through this downturn in the housing market, I encourage our institutions to continue these efforts.”
From January to June 2008, new loan modifications increased by more than 80 percent, while new payment plans grew by 8 percent, according to the report. The two types of loss mitigation actions reached more than 90,000 in June alone.
During the same period, the number of new foreclosures ranged from a low of nearly 92,000 in March to a high of more than 99,000 in May, before declining to about 96,000 in June, the report showed.
Other key findings in the OCC-OTS report included:
- New loss mitigation actions (loan modifications and payment plans) relative to new foreclosures averaged more than 87 percent during the second quarter, about 12 percentage points higher than during the first quarter.
- More than nine out of 10 mortgages remained current. However, credit quality declined during the quarter across all risk categories.
- There were increases in early stage delinquencies (30-59 days past due) and seriously delinquent mortgages (60 or more days past due, plus loans to bankrupt borrowers who are 30 or more days past due).
To view a copy of the agencies' full mortgage metrics report, click here.
Lenders modified 112,353 first-lien mortgages, an increase of 56 percent from the previous quarter, according to OCC and OTS data. Meanwhile, new foreclosures rose to 288,740 in the second quarter, from 278,857 the previous quarter.
The combined report, which replaces separate studies by the two agencies, represents approximately 60 percent of all mortgages outstanding in the United States. At the end of the second quarter, the 14 national banks and thrifts covered in the report serviced more than 34.7 million first-lien mortgage loans, totaling $6.1 trillion.
“As banks continue to work through this portion of the credit cycle, we are watching closely to ensure they have safe and sound risk management strategies in place,” said Comptroller of the Currency John C. Dugan. “Producing this report jointly with the OTS helps to provide a more transparent and systemic view of mortgage performance within federally regulated banks and thrifts to examiners and the public.”
OTS Director John Reich pointed to the increase in foreclosure prevention actions as a positive development. “This joint report provides valuable insights never previously available. It shows that the trend is definitely moving in the right direction to minimize the number of avoidable foreclosures and keep more Americans in their homes,” Reich said. “As we move through this downturn in the housing market, I encourage our institutions to continue these efforts.”
From January to June 2008, new loan modifications increased by more than 80 percent, while new payment plans grew by 8 percent, according to the report. The two types of loss mitigation actions reached more than 90,000 in June alone.
During the same period, the number of new foreclosures ranged from a low of nearly 92,000 in March to a high of more than 99,000 in May, before declining to about 96,000 in June, the report showed.
Other key findings in the OCC-OTS report included:
- New loss mitigation actions (loan modifications and payment plans) relative to new foreclosures averaged more than 87 percent during the second quarter, about 12 percentage points higher than during the first quarter.
- More than nine out of 10 mortgages remained current. However, credit quality declined during the quarter across all risk categories.
- There were increases in early stage delinquencies (30-59 days past due) and seriously delinquent mortgages (60 or more days past due, plus loans to bankrupt borrowers who are 30 or more days past due).
To view a copy of the agencies' full mortgage metrics report, click here.
