OCC Mortgage Metrics Report

New Loss Mitigation Actions Relative to New Foreclosures

For a given month, "new foreclosures" consisted of all mortgages on which servicers commenced formal foreclosure proceedings (e.g., public notice, judicial filing). New foreclosures often do not result in a foreclosure sale or loss of the borrower's home because banks simultaneously pursue other loss mitigation strategies or borrowers take action to return their mortgages to a current and performing status.

For each month, the following data show new loss mitigation actions as a percentage of new foreclosures. Thus, for a given category like subprime, a percentage exceeding 100 percent means that there were more new loss mitigation actions than new foreclosures.

Subprime mortgages consistently had the highest ratio of new loss mitigation actions to new foreclosures; prime mortgages consistently had the lowest. In fact, the total number of new loss mitigation actions for subprime mortgages consistently exceeded the number of new foreclosures. The opposite was true for prime mortgages, where new foreclosures exceeded new loss mitigation actions each month.

The emphasis on loss mitigation for subprime mortgages corresponds to the nationwide focus on this higher risk sector. Indeed, for such mortgages in March, new loss mitigation actions were nearly twice as frequent as new foreclosures (i.e. 86 percent greater).