Bank Mortgage Delinquency Down, REOs Up

In the first quarter of this year, 76 percent of residential first liens serviced by banks were considered prime. Borrowers in this category had credit scores of at least 660.

Prime share of the banks’ mortgage servicing portfolios was no different than in the final quarter of last year and was also unchanged from the first quarter of last year.

The Office of the Comptroller of the
Currency delivered the details in its First Quarter 2016 OCC Mortgage Metrics Report.

The findings were based on data reported by Bank of America, Citibank, HSBC, JPMorgan Chase, PNC, U.S. Bank and Wells Fargo. The group services or owns 38 percent of all outstanding residential first-lien mortgages.

Alt-A mortgages, those to borrowers with credit scores of between
620 and 659, made up 9 percent of servicing portfolios. Alt-A share was 10 percent three months earlier and a year earlier.

Subprime loans to borrowers with scores less than 620 represented 5 percent of the banks’ servicing portfolios, the same share as in the fourth-quarter 2015 and off from 6 percent in the first-quarter 2015.

As of the first quarter of this year, the seven banks serviced 21,124,000 first-lien mortgages for $3.628 trillion. About 90 percent of the loans were serviced for others.

Outstandings were trimmed from 21,473,000 loans for $3.678 trillion as of the end of 2015 and 22,666 loans for $3.821 trillion at the same point in 2015.

Loans that were past due or in foreclosure accounted for 5.1 percent of all loans as of the first quarter. The past-due rate declined from 5.9 percent three months earlier and 5.8 percent a year earlier.

The latest delinquency rate included a foreclosure rate
of 0.9 percent, improving from 1.1 percent as of the previous three-month period and 1.3 percent as of the year-earlier period.

The OCC said that newly initiated foreclosures fell to 58,900 in the first quarter from 63,400 the previous quarter and 83,100 in the first quarter of last year.