OTS Sees More Prime Defaults
New data released by the Office of Thrift Supervision show that the rise in new foreclosures during the first quarter was driven mainly by prime and alt-A loans, not subprime loans.
Yet mortgage servicers are more likely to help subprime borrowers avoid foreclosure than prime borrowers, according to the first OTS Mortgage Metrics Report.
The new OTS report uses loan-level data to examine the loss mitigation activities of the five largest OTS-regulated thrifts and their affiliates: Washington Mutual, Countrywide, IndyMac, Wachovia FSB and Merrill Lynch.
The five companies service 11.4 million single-family mortgages totaling $2.3 trillion, but only 9% of the loans are subprime.
Subprime loans in the portfolio accounted for 25% of new foreclosures in March while prime and alt-A loans comprised 42% and 23% of new foreclosures, respectively.
"Prime mortgages experienced the greatest new foreclosures in each month of the first quarter. This is not surprising given that 70% of all mortgages in the total portfolio were prime mortgages," OTS says.
Servicers increased their loss mitigation efforts by 26% from February to March as 49,000 borrowers agreed to loan modifications or repayment plans.
The total number of new loss mitigation actions for subprime loans almost equaled the number of new foreclosures in March. The subprime loss mitigation/foreclosure ratio was 95% compared to 25% for prime loans.
The servicers modified the loan terms for 12,850 subprime borrowers and 7,550 prime borrowers in March.
"Prime mortgages received the fewest loan modifications relative to new foreclosure actions," the OTS report says.
Overall, the five servicers had 49,000 loans in loss mitigation as of March 31 with 82,800 prime loans and 49,300 subprime loans in the process of foreclosure.
OTS focused on loan modifications and payment plans in the first report. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/