A method, computer program product, and computer system for processing video frames. A current frame is divided into M blocks that include at least two differently sized blocks. M is at least 9. Each block in the current frame is classified as being a motion block or an I-BLOCK. Overlapped block motion compensation (OBMC) is performed on each block of the M blocks according to a predetermined scan order. The block on which OBMC is being performed is denoted as a self block. The OBMC is performed on the self block with respect to its neighbor blocks. The neighbor blocks consist of nearest neighbor blocks of the self block. Performing OBMC on the self block includes generating a weighting window for the self block and for each of its neighbor blocks.