Mortgage Daily

Published On: March 30, 2015

Federally chartered national banks have reduced the size of their collective servicing portfolios each quarter for more than three years. Also declining was mortgage delinquency.

As of the end of last year, national banks serviced 23,122,316 residential loans for a total of $3.9064 trillion.

Bank’s servicing portfolios declined from 23,562,663 loans for $3.9807 trillion as of Sept. 30, 2014, and 24,902,063 loans for $4.2051 trillion as of Dec. 31, 2013.

In fact, the industries’ aggregate servicing portfolio has been on the decline every single quarter since the second-quarter 2011, when banks serviced 32,769,738 loans for $5.6830 trillion.

The Office of the Comptroller of the Currency reported the data in its OCC Mortgage Metrics Report Disclosure of National Bank Mortgage Loan Data Fourth Quarter 2014.

Prime mortgages accounted for 76 percent of the most-recent outstandings, while Alt-A loans made up another 10 percent and 6 percent were subprime. The borrower type was not identified on the remaining 8 percent.

The OCC defines prime mortgages as those where the borrower has a credit score of at least 660. Alt-A borrowers have scores between 620 and 659, and subprime borrowers have credit scores less than 620.

Mortgages that were at least 30 days past due, in bankruptcy or in foreclosure accounted for 6.8 percent of the collective bank portfolio as of the end of last year. Delinquency declined from 7.0 percent in the previous three-month period and 8.2 percent in the same period in 2013.

On just
bank portfolio loans, delinquency was 11 percent. The rate on government-guaranteed mortgages was 12 percent, while it was 3.1 percent on government-sponsored enterprise loans.

Seriously delinquent loans, those that were at least 60 days past due or in bankruptcy,
finished 2014 at 3.1 percent. The rate dropped to 1.4 percent on prime mortgages but jumped to 7.8 percent on Alt-A loans and 13.5 percent on subprime mortgages.

There were 75,395 foreclosures initiated during the latest period by banks, fewer than the 82,668 started in the third quarter and 124,468 begun in the fourth-quarter 2013.

For all of last year, 328,697 foreclosures were started, fewer than the 584,012 initiated in 2013.

As of Dec. 31, 2014, there were 315,922 foreclosure in process, down from 353,906 three months earlier and 523,528 a year earlier.

That put the foreclosure rate at 1.4 percent, down 10 basis points from the prior period and 70 BPS better than the a year prior.

Banks completed 39,331 foreclosure in the fourth-quarter 2014, less than the 45,245 repossessions in the previous period and 60,765 in the year-earlier period.

Full-year completed foreclosure fell to
189,445 from 308,543 in 2013.

Including completed foreclosures, short sales and deeds-in-lieu of foreclosure, there were 49,749 forfeiture actions in the final three months of last year.

On loans that have been modified, just over a third had re-defaulted within 18 months of modification. The share dropped to 23 percent on portfolio mortgages, 26 percent on Fannie Mae loans, and a quarter on Freddie Mac loans. But on mortgages guaranteed by the government, the share shot up past 46 percent, while it neared 42 percent on loans serviced for private investors.

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