January 2014 Mortgage Monitor

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Information about January 2014 Mortgage Monitor
Real Estate

Published on March 4, 2014

Author: LPSAppliedAnalytics

Source: slideshare.net

Black Knight Mortgage Monitor Mortgage Market Performance Observations Data as of January, 2014 Month-end Black Knight Financial Services

January 2014 Data Summary January Summary Statistics Delinquencies Foreclosure Foreclosure Starts Seriously Delinquent (90+) or in Foreclosure New Originations (data as of Dec-13) Jan-14 6.27% 2.35% 94,075 Monthly Change -2.96% -5.32% -10.2% YTD Change 0.0% 0.0% 0.0% Yearly Change -10.7% -31.2% -36.3% 4.92% -2.2% 0.0% -24.0% 347K 0.9% -47.1% -57.7% Jan-14 6.27% 2.35% 94,075 Dec-13 6.47% 2.48% 104,759 Nov-13 6.45% 2.50% 104,939 Oct-13 6.28% 2.54% 118,837 Sep-13 6.46% 2.63% 108,953 Aug-13 6.20% 2.66% 107,552 Jul-13 6.41% 2.82% 112,849 Jun-13 6.68% 2.93% 109,042 May-13 6.08% 3.05% 116,812 Apr-13 6.21% 3.17% 127,496 Mar-13 6.59% 3.37% 121,012 Feb-13 6.80% 3.38% 131,826 Jan-13 7.03% 3.41% 147,593 4.92% 5.03% 347K 5.05% 344K 5.10% 493K 5.26% 516K 5.22% 657K 5.53% 747K 5.62% 778K 5.71% 834K 5.95% 797K 6.29% 779K 6.34% 714K 6.48% 776K 12 Month History Black Knight Financial Services 347K 344K 493K 516K 657K 747K 778K 797K 779K 714K 776K 6.27% 6.47% 6.45% 6.28% New Originations 6.46% 6.20% 6.41% 6.68% 6.08% 6.21% 6.59% 6.80% 7.03% Total Delinquencies 834K Delinquencies Foreclosure Foreclosure Starts Seriously Delinquent (90+) or in Foreclosure New Originations 2

Focus Points  Focus 1: Originations and Sales, Refinance opportunities and HARP update  Focus 2: Home Equity originations, quality and performance  Focus 3: Pipeline update – foreclosure start and sale focus Black Knight Financial Services 3

Focus Point 1: Originations and Sales, Refinance opportunities and HARP update  Origination volume is the lowest since 2008, with prepayment speeds signaling more drops in refinance related originations  Increased cash purchases are supporting property sales, which are still up vs. 2012  The number of “refinancible” mortgages continues to decline with less incentive for both traditional and HARP eligible borrowers  As a result HARP and streamline activity have also dropped sharply since mid-2013 Black Knight Financial Services 4

Origination volume is the lowest since 2008 with further declines expected Gov’t Backed 2009 91% 3.2% 2010 89% 4.5% 2011 87% 6.5% 2012 84% 7.0% 2013 Black Knight Financial Services Investor Property 83% 9.0% 5

Prepayment speeds signal more drops in refinance related originations Black Knight Financial Services 6

Increased cash purchases have been supporting overall property sales Monthly sales were up 3.7% year over year, with full year ‘13 up 8.4% Black Knight Financial Services 7

“Refinancible” portion of the market continues to decline In the Money and Current = 5,119k loans ($488B UPB) Lowering Credit Score to 700 adds ~829k loans Black Knight Financial Services 8

The number of loans eligible for HARP under current standards has dropped significantly HARP Eligible and “In the Money” 709K (vs. 2,306K in Jan 2013) HARP 3.0 could add over 2.5M more (assuming non-GSE eligibility) Black Knight Financial Services 9

High LTV GSE originations (HARP and Streamlines) have dropped sharply since mid-2013 HARP volume down 70% year over year* *FHFA Refinance Report – Nov 13 Black Knight Financial Services 10

Outside of Nevada and Florida, mid-western states have the highest % of HARP eligibility in the nation Black Knight Financial Services 11

NY, OR and TX have among the highest % of loans that may be eligible for traditional refinance Black Knight Financial Services 12

Focus Point 2: Home Equity originations, quality and performance  2013 was the first year of increased HE originations since 2006 (though volumes are still lower than ‘10)  HELOC performance in recent vintages is pristine with origination activity concentrated in “superprime” borrowers while loan sizes have begun to increase again  Focus should remain on HELOCs that have begun to amortize Black Knight Financial Services 13

2013 was the first year of increased HE originations since 2006 (though volumes are still very low) Total HE Volumes are still down over 90% from 2006 and about even with 2009 Black Knight Financial Services 14

HE (and particularly LOC) originations are concentrated in “super-prime” borrowers Black Knight Financial Services 15

HELOC performance in recent vintages is pristine Black Knight Financial Services 16

HE loan sizes are beginning to increase again Black Knight Financial Services 17

HELOCs that have begun to amortize are an ongoing cause for concern New problem loan rates for pre-2004 HELOC vintages are up 27% year over year Black Knight Financial Services 18

Focus Point 3: Pipeline update – foreclosure start and sale focus  Foreclosure starts are at multi-year lows with a large drop in early stage starts (potentially CFPB and NMS rules related activity)  While starts have declined, seriously delinquent deterioration has been trending slightly upwards over the last six months  Foreclosure sales increased after holiday lull  The combination of lower starts and increased sales have pushed foreclosure inventory to the lowest level since 2008 Black Knight Financial Services 19

Foreclosure starts continue to hit multi-year lows Black Knight Financial Services 20

The recent drop in foreclosure starts primarily impacted the newly non-current loans Black Knight Financial Services 21

Foreclosure starts as a percentage of seriously delinquent inventory are the lowest on record Black Knight Financial Services 22

The ratio of serious deterioration to foreclosure starts is at the highest level since 2010 Black Knight Financial Services 23

After holiday moratoria, January saw an increase in foreclosure sale activity Black Knight Financial Services 24

DQs follow typical seasonal pattern while fewer FC starts and more sales push FC inventory lower Black Knight Financial Services 25

BKFS Mortgage Monitor Appendix Data as of January, 2014 Month-end Black Knight Financial Services

January 2014 Data Summary January Summary Statistics Delinquencies Foreclosure Foreclosure Starts Seriously Delinquent (90+) or in Foreclosure New Originations (data as of Dec-13) Jan-14 6.27% 2.35% 94,075 Monthly Change -2.96% -5.32% -10.2% YTD Change 0.0% 0.0% 0.0% Yearly Change -10.7% -31.2% -36.3% 4.92% -2.2% 0.0% -24.0% 347K 0.9% -47.1% -57.7% Jan-14 6.27% 2.35% 94,075 Dec-13 6.47% 2.48% 104,759 Nov-13 6.45% 2.50% 104,939 Oct-13 6.28% 2.54% 118,837 Sep-13 6.46% 2.63% 108,953 Aug-13 6.20% 2.66% 107,552 Jul-13 6.41% 2.82% 112,849 Jun-13 6.68% 2.93% 109,042 May-13 6.08% 3.05% 116,812 Apr-13 6.21% 3.17% 127,496 Mar-13 6.59% 3.37% 121,012 Feb-13 6.80% 3.38% 131,826 Jan-13 7.03% 3.41% 147,593 4.92% 5.03% 347K 5.05% 344K 5.10% 493K 5.26% 516K 5.22% 657K 5.53% 747K 5.62% 778K 5.71% 834K 5.95% 797K 6.29% 779K 6.34% 714K 6.48% 776K 12 Month History Black Knight Financial Services 347K 344K 493K 516K 657K 747K 778K 797K 779K 714K 776K 6.27% 6.47% 6.45% 6.28% New Originations 6.46% 6.20% 6.41% 6.68% 6.08% 6.21% 6.59% 6.80% 7.03% Total Delinquencies 834K Delinquencies Foreclosure Foreclosure Starts Seriously Delinquent (90+) or in Foreclosure New Originations 27

Seven of the top 10 states for total non-current are judicial State National Del % FC % 6.3% MS 13.4% NJ * 7.1% FL * 6.7% NY * 6.6% LA * 9.8% ME * 6.9% RI 8.7% AL 9.5% CT * 6.7% MD * 7.4% IN * 8.0% PA * 7.5% AR 8.5% DE * 7.5% NV 6.9% OH * 7.3% WV 8.4% * - Indicates Judicial State 2.3% 2.0% 7.0% 7.0% 5.6% 2.1% 4.6% 2.8% 1.3% 3.8% 3.1% 2.4% 2.7% 1.7% 2.6% 3.1% 2.6% 1.3% Black Knight Financial Services NonCurr % 8.6% 15.3% 14.1% 13.7% 12.2% 12.0% 11.6% 11.5% 10.9% 10.5% 10.5% 10.4% 10.3% 10.2% 10.1% 9.9% 9.9% 9.7% Yr/Yr Change in NC% -17.4% -9.1% -13.5% -27.8% -9.5% -5.3% -9.3% -8.3% -4.7% -14.6% -16.5% -12.1% -9.6% -15.1% -10.7% -30.8% -14.3% -8.4% State Del % FC % National 6.3% 2.3% GA TN IL HI SC MA OK VT KY NC NM TX MO WI DC MI NH 8.5% 8.6% 6.2% 4.6% 7.2% 7.2% 6.5% 5.5% 6.5% 7.1% 5.5% 7.1% 6.8% 5.9% 5.1% 6.5% 6.2% 1.2% 1.1% 3.4% 5.0% 2.3% 1.8% 2.3% 3.0% 1.9% 1.3% 2.6% 0.9% 0.9% 1.8% 2.3% 0.9% 1.1% * * * * * * * * NonCurr % 8.6% 9.7% 9.7% 9.6% 9.5% 9.5% 9.1% 8.8% 8.5% 8.4% 8.4% 8.1% 8.0% 7.8% 7.6% 7.5% 7.4% 7.3% Yr/Yr Change in NC% -17.4% -16.6% -10.2% -22.5% -12.4% -14.6% -6.6% -9.9% -7.5% -10.7% -16.6% -12.5% -8.1% -8.2% -15.3% -16.0% -15.4% -10.2% State Del % National KS IA WA OR UT VA ID NE CA AZ MN WY MT CO AK SD ND FC % 6.3% * * * * * 2.3% 5.9% 5.0% 4.5% 3.8% 5.0% 5.2% 4.0% 4.9% 4.4% 4.4% 3.9% 4.0% 3.3% 3.7% 3.6% 3.1% 2.1% 1.3% 1.9% 1.8% 2.5% 1.0% 0.7% 1.7% 0.8% 0.8% 0.8% 0.7% 0.6% 1.0% 0.6% 0.6% 0.9% 0.7% NonCurr % 8.6% 7.2% 6.9% 6.4% 6.3% 6.1% 5.9% 5.7% 5.7% 5.2% 5.2% 4.6% 4.5% 4.4% 4.3% 4.2% 4.0% 2.7% Yr/Yr Change in NC% -17.4% -9.7% -11.6% -27.4% -17.4% -19.7% -15.0% -20.7% -8.8% -29.2% -25.0% -16.5% -3.0% -12.3% -16.9% -11.0% -11.6% -14.5% 28

Loan counts and average days delinquent Black Knight Financial Services 29

BKFS Mortgage Monitor Disclosures: Product / Metric Definitions and Market Sizing Black Knight Financial Services

Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Black Knight Financial Services 31

Disclosure Page: Metrics Definitions  Total Active Count: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total active count.  Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquent.  90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month.  Foreclosure Inventory: The servicer has referred the loan to an attorney for foreclosure. Loans remain in foreclosure inventory from referral to sale.  Foreclosure Starts – Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month.  Non-Current: Loans in any stage of delinquency or foreclosure.  Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that moves into post-sale status or is flagged as a foreclosure liquidation.  REO: The loan is in post-sale foreclosure status. Listing status is not a consideration, this includes all properties on and off the market.  Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving. Black Knight Financial Services 32

Disclosure Page: Extrapolation Methodology Mortgage statistics are scaled to estimate the total market performance based on coverage within the McDash database. The following table contains information on market coverage by product as of June 2012; extrapolations also include adjustments for vintage and as of date. Additional information is available upon request. Black Knight Financial Services 33

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