Banks report rising mortgage arrears

Banks reported an increase in foreclosures during the first quarter of 2022, according to a quarterly survey published by the Office of the Comptroller of the Currency this week.

The survey, which looked at service metrics provided by seven undisclosed domestic banks, found that 19,542 new foreclosures were initiated in the first quarter of 2022.

The OCC said this marked a jump from the previous quarter, but added that the volume of foreclosures in the first quarter was comparable to foreclosure volumes before the COVID-19 pandemic.

Most industry watchers predicted that the national foreclosure rate would increase once foreclosure moratoriums end on July 31, 2021.

Home forfeiture actions, including completed foreclosure sales, short sales and actions in lieu of foreclosures, also rose 26.8% year-over-year to 2,410, according to the OCC.

The seven banks surveyed reported a total of 42,427 changes made, down 10.7% from the previous quarter.

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Of the modifications made, the OCC said 97.4% were “combined modifications,” where interest rate reductions and term extensions are applied to a loan to help lower a mortgage payment. borrower.

Of the combination modifications made, 83% included the capitalization of overdue interest and fees, 88.6% included an interest rate reduction, 84.2% included a term extension, and 22.3% of modified loans included a deferral of principal, the OCC said.

The report adds that of the 42,427 modifications made during the quarter, 34,278 reduced the monthly payment before loan modification.

The regulator said 3,721 loan modifications were completed in the third quarter of 2021 and six months later 2,915, or 8.6%, were 60 days or more overdue or in foreclosure at the end of March 2021. .

The banks surveyed said they were servicing about 12.2 million residential first mortgages with $2.6 trillion in outstanding principal balances, according to the report. This represents 22% of all outstanding residential mortgage debt in the country.

Year over year, the OCC found that mortgage performance had improved – the percentage of mortgages active and performing at the end of the first quarter had increased to 96.9% from 94.2% last year.

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