Mortgage Performance Improve in Third Quarter 2016

Performance of first-lien mortgages improved during the third quarter of 2016 compared with a year earlier, according to the Office of the Comptroller of the Currency's (OCC) quarterly report on mortgages.

The OCC Mortgage Metrics Report, Third Quarter 2016 , showed 94.8 percent of mortgages included in the report were current and performing at the end of the quarter, compared with 93.9 percent a year earlier.

The report also showed that foreclosure activity has declined. Reporting servicers initiated 47,955 new foreclosures during the third quarter of 2016, a 25.3 percent decrease from a year earlier.

As first-lien mortgage performance improves, the need for other loss mitigation actions declines. Servicers implemented 35,642 mortgage modifications in the third quarter of 2016. Eighty-eight percent of the modifications reduced borrowers' monthly payments.

The OCC instituted the following changes to its data collection method for the data reported in this report:

Servicers now submit data for prime, alt-a, subprime, and other mortgages using their internal credit scoring system rather than FICO scores.

The report now includes first-lien, closed-end home equity loans.

Banks now submit aggregate data directly to the OCC, as opposed to submitting loan level data to a third-party aggregator.

The first-lien mortgages included in the OCC's quarterly report comprise 36 percent of all residential mortgages outstanding in the United States or about 20.4 million loans totaling $3.5 trillion in principal balances. This report provides information on mortgage performance through September 30, 2016.