Fewer borrowers are defaulting on mortgages that were modified, in many cases to avoid foreclosures, according to the Office of the Comptroller of the Currency.
The banking regulator’s Mortgage Metrics Report released Thursday reviewed trends at seven national banks and one thrift with the largest servicing portfolios.
It showed that 12.7 percent of loans modified in 2013 re-defaulted after six months. That’s compared to a 32.2 percent re-default rate in 2009.
In 2008, when foreclosures hit crisis peak levels, the rate was 44.8 percent. (The most recent data was collected as of the second quarter of this year.)
Government-sponsored and lender-led mortgage reduction programs have focused more on helping borrowers in the long-term.
Meanwhile, there is a greater attempt at intervening before home-loan borrowers fall behind.
There is “more emphasis on affordability and sustainability for the borrower,” Kathy Gouldie, an OCC lead expert in retail credit and mortgage banking, told the National Mortgage News.
The eight servicers tracked in the report had completed 208,000 loan modifications and other “home retention” actions in the second quarter, the OCC said. However, that number is down 34 percent from a year earlier.
Overall, the OCC said mortgage performance has improved year-over-year.
The regulator said 92.9 percent of mortgages were current and performing at the end of the second quarter, compared with 93.1 percent at the end of the previous quarter and 90.6 percent a year earlier.
The percentage of mortgages that were 30 to 59 days past due decreased 17.3 percent from a year earlier to 2.4 percent. Seriously delinquent mortgages — 60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due — decreased 17.0 percent from a year earlier.