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Financial Services Law Insights and Observations

OCC reports on mortgage performance

Federal Issues OCC Bank Regulatory Mortgages Foreclosure Consumer Finance Covid-19

Federal Issues

On December 10, the OCC reported that 95.6 percent of first-lien mortgages were current and performing at the end of the third quarter of 2021—an increase from 92.5 percent at the end of the third quarter of 2020. According to the report, seriously delinquent mortgages declined from 3.8 percent in the prior quarter (5.8 percent a year ago) to 3.1 percent. In the third quarter of 2021, servicers initiated 925 new foreclosures, which is a 56.3 percent increase from the previous quarter and an increase of 150.7 percent compared to a year ago. The OCC noted that events related to the pandemic, such as foreclosure moratoriums, “significantly affected these metrics.” Additionally, mortgage modifications decreased 14.8 percent from the prior quarter. Of the reported 33,721 mortgage modifications, 59.6 percent reduced borrowers’ pre-modification monthly payments, while 98.3 percent were “combination modifications” that “included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension.”

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