Servicer Loan Mods Deteriorate
Washington-Less than three in 10 mortgages that were modified by servicers in the first quarter of 2008 are still current, according to a new "mortgage metrics" report released by the Office of the Comptroller of the Currency.
The report indicates that as loan modifications age the chance of a mortgage going delinquent again increases significantly.
The OCC found that just 29.5% of loans modified in the first quarter of 2008 are still "current and performing" while 48.2% of those modified in the fourth quarter were current.
As for mortgages modified in the first quarter of this year - with the stated goal being home retention by the mortgagor - almost 36% are already in some stage of delinquency, the OCC found.
Even though the relapse rate is poor, mortgage servicers are under increasing regulatory and political pressure to help consumers. Over the past few months the government has urged servicers to engage in what OCC chief John Dugan calls "more sustainable, payment-reducing modifications" focusing on a mortgagor's current debt-to-income ratio and other factors.
Loan modifications by mortgage companies increased by 172% in the first quarter compared to the same period last year.
Servicers initiated 185,156 new loan modifications in the first quarter, a 55% jump from the previous quarter. The report also shows that foreclosure actions in the first quarter totaled 290,900, up only 4% since the first quarter of 2008.
However, some states - including California - have foreclosure moratoriums in place, which will keep those numbers artificially low.