Fourth Quarter Mortgage Statistics Are Inby Tim Manni
The Comptroller of the Currency and the Office of Thrift Supervision issued their joint release of the 2008 fourth-quarter mortgage statistics. The report focused heavily on loan-modification statistics as well.
With overall credit quality declining in the fourth quarter of 2008, less than 90% of mortgages were performing — down from 93% at the end of the third quarter. While the highest level of delinquencies continued amongst subprime loans, the highest percentage increase of delinquencies was in prime loans.
Loan mods “were both high and rising” throughout 2008, with the third quarter reporting the highest level of re-default rates. Fourth quarter statistics showed that:
Re-default rates were consistently lower for modifications that resulted in lower monthly payments. When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later. By contrast, some 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months. The comparable number for loan modifications in which payments increased was 46 percent.
“The data also showed that modifications that reduced monthly payments significantly had much lower re-default rates. That result is fully in line with the approach taken in the Administration’s ‘Making Home Affordable’ program, which is based on lowering monthly payments as the means to achieve sustainable modifications” [said Comptroller of the Currency John C. Dugan].
“The trend toward lowering payments to make home mortgages more affordable is moving in the right direction,” [OTS Acting Director John E.] Bowman said. “The continuing decline in credit quality underscores the need for mortgage servicers to increase their efforts to modify home mortgages. Sustainable and affordable mortgages is a goal we all share for keeping more Americans in their homes.”