First-Lien Mortgages

Journal of Accountancy
September 26, 2011 | COMMENTS

The performance of first-lien mortgages serviced by large national banks and federal thrifts improved during the first quarter of 2011, according to a report released by major federal banking regulators.

The quarterly report by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) showed that 88.6% of the 32.7 million loans in the portfolio were current and performing at the end of the first quarter of 2011. That was up from 87.6% at the end of the fourth quarter of 2010 and 87.3% in the year-ago period.

While the report said delinquencies and foreclosures remained elevated from historic norms, delinquencies improved across all risk categories and for all investors. Mortgages that were 30–59 days delinquent fell to 2.6% of the portfolio, the lowest level in three years. Mortgages more than 60 days past due and delinquent loans to bankrupt borrowers declined for the fifth consecutive quarter to 4.8% of the portfolio, the lowest level since the first quarter of 2009.

New in this report are data on the performance of mortgages held by the reporting national banks and federal thrifts. Because most of the loans tend to be nonconforming loans with increased risk characteristics and geographic concentration in weaker real estate markets, mortgages held by reporting banks and thrifts perform worse than mortgages serviced for others. The report said that 80.3% of mortgages held by reporting banks and thrifts were current and performing at the end of the quarter, compared with 88.6% of all reported mortgages. Reporting banks and thrifts hold 14.5% of the mortgages included in the report.

 The OCC and OTS Mortgage Metrics Report, First Quarter 2011, available at tinyurl.com/3uw6a5r, covers about 63% of all first-lien mortgages in the United States, worth $5.7 trillion in outstanding balances.

For more details read the complete article at www.journalofaccountancy.com. Reprinted with permission.