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‘Seriously delinquent’ mortgages remain elevated, OCC says


Delinquency rates on residential mortgages held by the nation’s top banks remained elevated in the third quarter but showed some improvement from the second quarter, the Office of the Comptroller of the Currency said Wednesday.

The percentage of seriously delinquent mortgages that are 60 or more days past due hit 5.8% in the third quarter, compared with 1.5% a year earlier, according to the OCC’s Mortgage Metrics report. However, the third-quarter decline marked an improvement from the second quarter when 6.8% of mortgages were seriously delinquent.

The Coronavirus Aid, Relief, and Economic Security Act provided 180 days of forbearance and another 180 days, if needed, to struggling borrowers while also waiving late fees and additional interest. While that relief only applied to loans backed by Fannie Mae, Freddie Mac, the Federal Housing Administration and other smaller agencies, the OCC said that “banks implemented the CARES Act forbearance moratoriums for all covered loans.”

The CARES Act prohibits servicers from reporting borrowers as delinquent if they have asked for forbearance. Some borrowers have stopped paying their mortgage and have not asked their servicer for relief, resulting in higher delinquency rates.

Despite the financial devastation of the coronavirus pandemic, foreclosures have largely been put on hold because of a national moratorium that was extended until the end of the year by the Federal Housing Finance Agency.

Mortgage servicers initiated just 329 new foreclosures in the third quarter, up from 249 in the second quarter, and nearly 20,000 in the first quarter. The figures include loans held by borrowers in bankruptcy whose payments are 30 or more days past due, the OCC said.

“Events associated with the COVID-19 pandemic, including foreclosure moratoriums that began March 18, 2020, and have been extended to January 31, 2021, have caused significant decreases in these metrics,” the report stated.

Additionally, servicers completed 14,097 mortgage modifications in the third quarter, of which roughly 71% included multiple actions such as an interest rate reduction and a term extension. Roughly 41% of loan modifications in the third quarter reduced a borrower’s monthly payments, the OCC said.

The OCC’s data covers first-lien residential mortgage loans serviced by seven national banks: Bank of America, Citigroup, HSBC, JPMorgan Chase, PNC Financial Services Group, U.S. Bancorp, and Wells Fargo. The banks serviced roughly 14.4 million loans or 27% of all residential mortgage debt outstanding, as of Sept. 30.