OCC MORTGAGE METRICS REPORT PUBLISHED

The OCC has published its Mortgage Metrics Report for the Third Quarter of 2023.  The Report presents performance data for the third quarter of 2023 for loans that the reporting banks own or service for others as a fee-based business.  The data in the report reflects a portion of first lien mortgages in the country, excluding junior liens, home equity lines of credit, and home equity conversion mortgages.  For perspective, “the reporting banks serviced approximately 11.8 million first-lien residential mortgage loans with $2.7 trillion in unpaid principal balances.  This $2.7 trillion was 22 percent of all residential mortgage debt outstanding in the United States.”
 
​Daren Blomquist, Vice President, Market Economics, Auction.com, and AISLE Cross-Section Leader for Trends + Technology, also reviewed the data noted the below.   

​"while somewhat skewed toward an inherently less risky segment of the market, this report provides more confirmation that mortgage performance has settled into a more stable, sustainable pattern over the past year as the dust settled from the whirlwind market of 2020 and 2021. Absent of some unforeseen shock to the economy or housing market, I’d expect this pattern to continue in 2024. I will be keeping a close eye on redefault rates, which have now increased for five consecutive quarters and have doubled since the fourth quarter of 2021, when the pandemic foreclosure moratorium ended. If redefault rates continue to rise, it could be an indication that more distressed homeowners who have held off foreclosure in the short term are running out of runway when it comes to avoiding foreclosure for the long term.”

Marissa Yaker, Deputy General Counsel of Regulatory Affairs, Padgett Law Group and Chairperson of AISLE,  adds her thoughts on the Report's data.

"as an industry, we have BEEN SEEING LOW DEFAULT RATES, but the re-default data is interesting to track in light of all the loss mitigation that took place during the past few years. Hopefully, these Borrowers can benefit from the additional programs that some of the agencies will be releasing in 2024." ​

Within the Report, the OCC includes a chart that highlights the Number of Re-Defaults for Loans Modified Six Months Previously Modified Loans 60 or More Days Delinquent Six Months After Modification by State.  It is interesting to review, due to all the loss mitigation in light of the pandemic. Some of the key points from the OCC Report:
 
Summary of Delinquent Loans:

• The number of foreclosures in process decreased from the third quarter of 2022. The number of seriously delinquent loans has trended down since the third quarter of 2021.
• The percent of seriously delinquent loans has trended down since the third quarter of 2021. The percent of 30–59-day delinquent loans has trended up since the first quarter of 2023.
• Servicers initiated 8,965 new foreclosures in the third quarter of 2023, an increase from the prior quarter: however, a decrease from a year earlier.  Home forfeiture actions during the third quarter of 2023—completed foreclosure sales, short sales, and deed-in-lieu of-foreclosure actions—decreased 17.3 percent from a year earlier to 2,244. Events associated with the COVID-19 pandemic, including foreclosure moratoriums that began March 18, 2020, and were extended to July 31, 2021, have significantly affected these metrics.

Summary of Modifications:

• Servicers completed 7,436 modifications during the third quarter of 2023, a 13.8 percent decrease from the previous quarter’s 8,623 modifications.
  • Of these 7,436 modifications, 6,367 or 85.6 percent, 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. Of the remaining 1,069 loan modifications, 1,045 received a single action and 24 were not assigned a modification type.
  • Among the 6,367 combination modifications completed during the quarter, 5,549, or 87.1 percent, included a term extension; 5,422, or 85.1 percent, included capitalization of delinquent interest and fees; 2,059, or 32.3 percent, included an interest rate reduction or freeze; 1,805, or 28.3 percent, included principal deferral; and 10, or 0.1 percent, included principal reduction.

 
Link to the OCC Report:
Mortage Metrics Report Third Quarter 2023 (occ.gov)