U.S. residential mortgage performance declined in Q2: OCC

September 23, 2020.

The percentage of U.S. residential mortgages that are current and performing declined to 91.1% in the second quarter of 2020, down from 96.1% during the same period in 2019, according to data released Wednesday by the Office of the .

Despite the decline in performance, foreclosures dropped significantly because of moratoriums and other actions taken because of the COVID-19 pandemic. Only 249 new foreclosures were issued in the second quarter, a 98.7% drop from the first quarter and a 98.8% drop from the second quarter of 2019, the agency said in its latest Mortgage Metrics Report. Home forfeitures during the second quarter of 2020 were down 90.1% from a year earlier. 

The number of foreclosures in process remains relatively low, although the number of “seriously delinquent” loans, or loans delinquent for at least 60 days, have increased during the pandemic, according to the report. Servicers completed nearly 11,000 modifications during the quarter, down 22.9% from the first quarter.

Most of the modifications were “combined modifications” that affect the affordability and sustainability of a loan, such as interest-rate reduction and a term extension. Nearly 90 percent of the total modifications completed during the quarter reduced the loan’s monthly payment.

The OCC’s quarterly report collects data on first-lien residential mortgage loans serviced by seven national banks with large mortgage-servicing portfolios: Bank of America, Citbank, HSBC, JPMorgan Chase, PNC, U.S. Bank and Wells Fargo.

Despite the OCC’s report finding a steep decline in foreclosures due to COVID-19 relief measures, major U.S. banks have come in for criticism over their handling of mortgages amid the pandemic. On Tuesday, front-line bank worker advocacy group the Committee for Better Banks published an analysis examining consumer complaints and mortgage policies at a dozen large U.S. banks, criticizing them for such issues as inconsistent policies and withholding important refinancing information during the pandemic.

The report by the organization’s Better Banks Accountability Project looked closely at the issue of mortgage forbearance after the enactment and eventual expiration of consumer relief provisions under the Coronavirus Aid, Relief, and Economic Security Act. Four of the 12 banks included in the analysis failed to state that they offered deferred payments and loan modifications, the committee found. Eight others were the subjects of complaints to the Consumer Financial Payments Bureau about lump-sum balloon payments at the end of forbearance windows.

— Additional reporting by Allie Ciaramella