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Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.


Bank Servicing Portfolios Shrink as Performance Improves

Portfolios down 15% in 2013

March 28, 2014

By Mortgage Daily staff

Banks and thrifts have been busy reducing the size of their mortgage servicing portfolios. At the same time, loan performance on the remaining loans has been improving.

There were 24,902,063 residential first mortgages serviced by financial institutions for $4.2051 trillion as of the end of last year.

That represented about half of all first liens outstanding based on data from Fannie Mae, which estimated that the total was $9.158 trillion at the end of 2013.

The statistics were outlined by the Office of the Comptroller of the Currency in the OCC Mortgage Metrics Report Fourth Quarter 2013.

Servicing portfolios have slumped since the end of 2012, when the total bank book was 28,979,134 loans for $4.9102 trillion.

The year-over-year decline likely reflects the sale of mortgage servicing rights to fast-growing players as banks grapple with Basel III. Combined servicing portfolios at Nationstar Mortgage LLC, Ocwen Financial Corp. and Quicken Loans Inc. collectively increased by $504 billion between the end of 2012 and the end of last year.

Of the most recent bank total, prime mortgages accounted for 75 percent, down from a 72 percent share as of Dec. 31, 2012, according to the OCC.

Alt-A mortgages, those with credit scores from 620 to 659, made up 10 percent of the latest book, down from 11 percent 12 months earlier.

Loans with credit scores less than 620, classified as subprime mortgages, had a 6 percent share, down from the 7 percent share as of year-end 2012.

The non-current rate on first mortgages was 8.2 percent as of Dec. 31, 2013. The total included mortgages at least 30 days past due, in bankruptcy or in the process of foreclosure.

Three months earlier, the non-current rate was 8.6 percent, while it came in at 10.6 percent 12 months earlier.

Loan performance improved for the fifth consecutive quarter.

But the delinquency rate on home loans owned by banks and thrifts was much higher at 12.6 percent, though portfolio delinquency was still better than 14.1 percent as of year-end 2012.

On just government-guaranteed mortgages -- including loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs -- delinquency was 13.9 percent, while it was only 4.1 percent on Fannie Mae and Freddie Mac loans.

Delinquency of between 30 and 59 days, excluding bankrupt borrowers, represented 2.6 percent of the latest overall figure, while the rate on loans seriously past due at least 60 days was 3.5 percent.

The serious delinquency rate on just subprime loans fell to 14.7 percent as of Dec. 31, 2013, from 16.0 percent a year earlier. Alt-A 60-day delinquency declined to 8.4 percent from 9.3 percent at the end of 2012, and the rate on prime mortgages fell to 1.6 percent from 2.3 percent.

As of the end of last year, there were 523,528 loans in the foreclosure process, a vast improvement from 967,467 at the end of 2012.

There were 124,468 new foreclosures initiated by mortgage servicer in the fourth quarter, fewer than the 156,773 foreclosures initiated in the fourth-quarter 2012.

For all of 2013, there were 584,012 foreclosures initiated by OCC-regulated financial institutions, fewer than the 998,964 foreclosures started in 2012.

Completed foreclosures fell to 60,765 in the fourth-quarter 2013 from 105,875 a year earlier.

Full-year 2013 repossessions fell to 308,543 from the 445,331 foreclosures completed in 2012.

The OCC noted that out of all 3,388,010 home loans that have been modified since 2008 by banks, 43 percent were either current or paid off as of the end of 2013. But 6 percent were between 30 and 59 days delinquent, 11 percent were 60 or more days delinquent, 4 percent were in the foreclosure process and 8 percent had completed the foreclosure process. The remaining 28 percent were no longer in the portfolio.

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