WASHINGTON (CN) – Fewer homeowners fell behind on their mortgages in the first quarter of 2012 than at any time in the last three years, the Office of the Comptroller of the Currency has reported.
According to the OCC Mortgage Metrics Report, 88.9 percent of first-lien residential mortgages in its study were current. The percentage of mortgages that were delinquent by 30 to 59 days and 60 to 89 days also fell to their lowest levels since the OCC started publishing the report in the first quarter of 2008.
The OCC’s report relies on data provided by nine banks with the largest mortgage-servicing portfolios representing 60 percent of all outstanding first-lien residential mortgages. The report does not represent a random sample of all mortgage loans.
The news was particularly good for mortgages serviced for Fannie Mae and Freddie Mac with 93.7 percent of their mortgages current.
The OCC attributes the improvement to the increasing strength of the economy and increased use of loan modification programs by mortgage servicers.
In fact, servicers started nearly twice as many loan modification plans as foreclosures or short sales during the first quarter, according to the report.
Over 80 percent of such modifications involved interest rate reductions, about 74 percent involved term extensions. Another 24.6 percent employed principal repayment deferrals, while just over 10 percent involved outright reductions in principle.
Servicers reduced monthly payments by an average of 27.4 percent for all borrowers who qualified for the modifications, with an average decrease of $437, the report says.
While foreclosures were still up 2.3 percent from a year ago,, and 1.8 percent over the fourth quarter of 2011, the number of newly initiated foreclosures fell by 8.1 percent from a year ago.