Bad Mortgages Turn Good

The US Treasury Department's Office of the Comptroller of the Currency and the Office of Thrift Supervision reported that 88.6% of the 32.7 million mortgage loans in the portfolio were current and performing at the end of the first quarter of 2011. While delinquencies and foreclosures remained elevated from historic norms, delinquencies improved across all risk categories and for all investors. Mortgages that were 30-59 days delinquent fell to 2.6% of the portfolio, the lowest level in three years. Mortgages more than 60 days past due and delinquent loans to bankrupt borrowers declined for the fifth consecutive quarter to 4.8% of the portfolio, the lowest level since the first quarter of 2009.

The number of mortgages entering the foreclosure process fell to 312,404—down 11.3% from the previous quarter and 15.6% from a year ago. The number of mortgages in the process of foreclosure fell slightly, but the overall portion of mortgages in the process of foreclosure remained unchanged from the previous quarter at about 4%. The number of mortgages that completed the foreclosure process rose by 26% from the previous quarter but was down 27.7% from a year ago, as servicers lifted voluntary moratoria on foreclosures that were in place during the previous quarters.

The 159,873 mortgage modifications implemented during the first quarter of 2011 reduced principal and interest payments by an average of $333. Modifications made under the Home Affordable Modification Program reduced payments by an average of $562.