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Definitions and Methods

The OCC Mortgage Metrics Report uses standardized definitions for three categories of mortgage creditworthiness: prime, Alt-A, and subprime. These are defined using ranges of FICO credit scores at the time of origination, as follows: prime — 660 and above; Alt-A — 620 to 659; and subprime — below 620.

Roughly 20 percent of loans in the data were not accompanied by FICO credit scores, and are classified in the report as "Other." This group of loans includes a mix of prime, Alt-A, and subprime loans, and is in large part the result of bank acquisitions of mortgage portfolios from third parties where scores were not readily available, as well as the fact that the retroactive data collection was provided on a "best–efforts" basis. The OCC is working with the participating banks to obtain and include credit scores with future submissions to reduce the percentage of loans in this category going forward.

Other standard definitions in the report include:

  • "Seriously delinquent loans" — all mortgages that were 60 or more days past due and all mortgages held by bankrupt borrowers who were 30 or more days past due. Loan delinquencies were reported following the Mortgage Bankers Association (MBA) convention that a loan is "past due" when a scheduled payment is unpaid for 30 days or more.2

  • "Loss mitigation action" — loan modification or payment plan.3

  • "Loan modification" — mortgage where terms of the loan were contractually changed, usually with respect to interest rates or term of the loan.

  • "Payment plan" — mortgage where the servicer and a borrower have agreed to a short–to–medium term change in scheduled terms and payments to return the mortgage to a current and performing status.

  • "New foreclosure" — mortgage where the servicer commenced a formal foreclosure proceeding during the month (e.g. public notice, judicial filing).4

The statistics and calculated ratios in this report are based on the number of loans rather than the dollar balance outstanding. Some percentage totals in the charts do not add up to 100 percent because of rounding.

2 The Office of Thrift Supervision (OTS) method is another reporting convention used by some institutions. Under the OTS method, a loan is "past due" when the borrower fails to make a second consecutive scheduled payment. For general regulatory reporting (Call Reports), institutions may use either method; generally, the MBA method results in higher reported delinquencies than the OTS method.

3 In addition to the two loss mitigation actions captured in this report – payment plans and loan modifications – mortgage servicers reported several alternative loss mitigation actions, including HomeSaver Advance, FHASecure, partial claims, new subsidy programs, and refinances with principal forgiveness. The OCC plans to include a broader range of loss mitigation actions in future reports.

4Many new foreclosures never result in the ultimate foreclosure sale or loss of the borrower's home because banks simultaneously pursue other loss mitigation actions and borrowers may act to return their mortgages to current and performing status.

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