A new government survey of most major U.S. banks found late payments improved from the end of the year to the end of the first quarter. While nonprime mortgages accounted for less than one-fifth of loans outstanding, they represented more than half of bank foreclosures in process.
Nine banks participated in the survey conducted by the Office of the Comptroller of the Currency.
The banks, including Bank of America, Citibank, First Horizon, HSBC, JPMorgan Chase, National City, USBank, Wachovia, and Wells Fargo, serviced more than 23 million first mortgage loans for $3.8 trillion at the end of the first quarter, OCC said. Their combined servicing portfolios accounted for 90 percent of all mortgages serviced by national banks and 40 percent of all mortgages outstanding.
Extrapolating these figure out, total residential mortgages outstanding and banks and non-banks on March 31 were around $9.5 trillion, up from $9.4 trillion on Dec. 31.
The subprime share of outstanding loans was 9 percent at the end of the first quarter, and Alt-A loans also accounted for 9 percent.
The report noted that 90 percent of the $3.8 trillion in loans were serviced for residential mortgage-backed securities investors.
Total delinquency, including mortgages past due at least 30 days and foreclosures, was 5.81 percent at the end of the first quarter, falling from 6.18 percent at the end of last year.
Serious delinquency, which excluded foreclosures and included loans past due 60 days and loans to bankrupt borrowers who were 30 days past due, was 2.21 percent at the end of the first quarter, falling from 2.33 percent at the end of the fourth quarter. Subprime loans, which accounted for less than 9 percent of the aggregate portfolio, represented the majority of serious delinquencies and had a 9.64 percent delinquency rate, down from 10.57 percent at yearend. Alt-A serious delinquency fell to 4.38 percent from 4.57 percent.
Subprime loans were defined as those to borrowers with credit scores below 620. Borrowers with credit scores between 620 and 659 were defined as Alt-A, while borrowers with scores of at least 660 were considered prime.
Loans in foreclosure jumped to 1.23 percent at the end of the first quarter from 1.03 percent and the end of December. During just March, however, foreclosures fell 21 percent from their peak in January. Of the 283,988 foreclosures in process on March 31, one-third were subprime mortgages and 21 percent were Alt-A. While the two nonprime categories only accounted for 18 percent of all loans outstanding, they represented about 54 percent of loans in foreclosure.
Loans entering foreclosure totaled 45,696 in March, down from 47,928 in December. During October, 47,836 new foreclosures were started. New subprime foreclosures accounted for 12,084 of March's activity and new Alt-A foreclosures were 9,160.
New payment plans on delinquent loans were 39,905 in March, up from 37,562 in November. But the pace of new loan modifications increased to 13,586 from 8,888 during the same period.