The Office of the Comptroller of the Currency reported a significant reduction in the number of foreclosure starts in the fourth quarter by the major banks it supervises.
The nine bank servicers initiated 156,750 foreclosures in the fourth quarter, down 38% from the third quarter and 46% from a year ago.
The OCC quarterly Mortgage Metrics report released Wednesday morning also shows that foreclosures in process fell below 1 million for the first time since June 2009.
The servicers were processing 967,500 foreclosures in 4Q, down 16% from 3Q and 23% from a year ago.
“We are definitely seeing a turn,” said OCC mortgage expert Bruce Krueger, and he expects to see further improvement over the next several quarters.
Some of the improvement is due to servicing transfers to nonbank servicers like Ocwen Financial, Walter Investment Management Corp. and Nationstar Mortgage.
The banks’ servicing portfolios fell by 5% from 4Q 2011 to 29.8 million loans by yearend 2012.
On the loan modification front, the bank servicers completed nearly 30,000 HAMP mods in 4Q, down 31% from a year ago. While new proprietary mods totaled 114,300 in 4Q, up over 50% from a year ago.
OCC reported that 20% of the mods involved principal reductions, compared to only 8.5% a year ago.
Krueger attributes the increase to the national mortgage settlement, which incentivized servicers to use principal reductions.
The nine OCC-supervised servicers are Bank of America, JPMorgan Chase, Citibank, HSBC, MetLife, PNC, U.S. Bank, Wells Fargo and OneWest Bank.