MORTGAGE LOAN COMPLIANCE®

According to the Office of the Comptroller of the Currency and Office of Thrift Supervision the delinquency rate on prime loans has doubled over the past year.

The delinquency rate is up 20% from the second quarter to 3.6% in the third quarter.

The third quarter report also shows continued deterioration in the performance of payment-option adjustable rate mortgages. Only 67.7% of options ARMs are performing, 16% are seriously delinquent and 11.9% are in the process of foreclosure. In the second quarter, 15.2% were seriously delinquent and 10% were in the process of foreclosure.

The national bank and thrift servicers completed more than 130,000 loan modifications in the third quarter. In total, more than 680,000 home loan modifications and payment plans, including those done on a trial basis, were implemented during the period. Despite the growth of loan modifications, more than half of all modifications are 60-days or more past due after six months.

In cases where the monthly principal and interest payment is reduced by at least 20%, the re-default rate is only 26.7%. After 12 months, the re-default rate is 38.6%, compared to 66% where the modification leaves the borrower's payment unchanged.

Overall, 87% of the loans in the servicing portfolios of large banks and thrifts are performing and 6.2% are 60-days or more past due, according to the OCC/OTS quarterly Mortgage Metrics Report.

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