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Monday, December 21, 2009 4:30 PM


3.6% of Prime Mortgages Delinquent 60 Days or Longer


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In spite of all the efforts to date Serious U.S. mortgage delinquencies up 20 percent.

Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, as the percentage of current and performing mortgages fell for the sixth consecutive quarter, banking regulators said on Monday.

The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are part of the Treasury Department, covered about two-thirds of all U.S. mortgages.

It found 3.6 percent of prime mortgages -- those made to the most credit-worthy borrowers -- were seriously delinquent in the third quarter. That was more than double the year-ago quarter and up nearly 20 percent from the 2009 second quarter.

Big U.S. banks and thrifts carried out 2.4 million home loan modifications, trial period plans or payment plans in the quarter, spurred mostly by a government plan offered by President Barack Obama, according to the report. But only 1 percent of those had been converted to permanent modifications as of September 30, 2009, the report said.

A major cause of this disconnect is that loan servicers are finding that many borrowers who initially appear to qualify for the program do not, according to the report.
OCC and OTS Mortgage Metrics Report Third Quarter 2009

Please consider the Press Release for the OCC and OTS Release Mortgage Metrics Report.
National bank and thrift servicers implemented more than 680,000 home loan modifications and payment plans in the third quarter of 2009 to avoid preventable foreclosures, according to a report released today by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The OCC and OTS Mortgage Metrics Report for the Third Quarter 2009 showed that the number represented a nearly 69 percent increase in home retention actions from the previous quarter.

Despite progress in this area, the percentage of current and performing mortgages dropped for the sixth consecutive quarter to 87 percent of the servicing portfolio, serious delinquencies rose to 6.2 percent, and foreclosures in process surpassed 1 million mortgages, or about 3.2 percent of the servicing portfolio. Of particular note was the deterioration among prime mortgages, the largest category of mortgages. Serious delinquencies at the end of the third quarter increased to 3.6 percent of prime mortgages, up almost 20 percent from the previous quarter and more than double a year ago.
Having read the press release, inquiring minds are digging into the OCC and OTS Mortgage Metrics Report
The percentage of modified loans 60 or more days delinquent or in process of foreclosure increased steadily in the months subsequent to modification (see Table 2). Modifications made after the third quarter of 2008 appeared to perform relatively better than older vintages.

The most recent modifications made in the second quarter of 2009 had the lowest percentage of mortgages (18.7 percent) that were 60 or more days delinquent three months subsequent to modification. This lower three-month re-default rate may be an early indicator of sustainability for loan modifications that reduce monthly payments.

Redefaults On Modified Loans



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Modifications on loans held in the servicers’ own portfolios continued to perform better than loans serviced for others. This difference may be attributable to differences in modification programs and the servicers’ flexibility to modify loan terms to achieve greater affordability and sustainability.

Modified government-guaranteed loans showed the highest delinquency rates at 6, 9, and 12 months following modification relative to other investor loan types (see Table 3).



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Completed foreclosures increased 11.9 percent from the prior quarter, reflecting the increasing inventory of foreclosures in process. New short sales increased by 22.4 percent to 30,766 as a result of an increased emphasis on this loss mitigation approach by homeowners seeking an alternative to foreclosure but either can not or do not wish to stay in their homes (see Table 6).



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There are more tables and data in the report worth taking a peek at. Nearly 3 more months have gone by, but as of the end of the third quarter things do not look that promising.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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