S&P/Experian: Delinquency Rate On First Mortgages Rose To 0.74% In February
The default rate for first mortgages crept up slightly to 0.74% in February, rising from 0.72% in January, according to the S&P/Experian Consumer Credit Default Indices.
Still, the default rate for first mortgages was down from 0.84% in February 2016.
The default rate for second mortgages was 0.51%, up from 0.48% in January but down from 0.60% in February of last year.
The index also measures the default rate on credit cards, which stood at 3.22%, up slightly from 3.21% and up from 2.56% a year earlier, as well as auto loans, which stood at 1.05%, down from 1.06% a month earlier but flat compared with February 2016.
The national bank card default rate of 3.22% was the highest since July 2013.
“The increase in the Fed funds rate announced [recently] by the Federal Reserve will push up the interest rate charged on bank cards in the near future,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “The quarter-percentage-point increase will be gradually passed through to the charges faced by those borrowing with their credit cards.
“Based on the projections made by members of the Fed’s policy committee, we could see three or possibly four additional increases this year,” Blitzer says. “Given the prospect of higher interest rates and continuing economic expansion, the recent rise in bank card default rates is not expected to immediately reverse.”
Blitzer notes that interest rates on auto loans and mortgages are also likely to advance following the Fed’s action.
Despite the fact that consumers will likely pay more in interest charges moving forward, job and income growth have at least been improving in recent months.
“The economy is expanding, adding over 200,000 new jobs each month,” Blitzer says. “However, wages are barely keeping up with inflation. Over the 12 months through February, hourly earnings adjusted for inflation were unchanged. Inflation has risen slightly in the past year and is now about two percent. The longer-term prospects for limiting or reversing the rise in bank card defaults depends on the outlook for wages and inflation, as well as interest rates. While interest rates on home mortgages and auto loans are likely to rise, the default rates don’t show any adverse trends now.”
Black Knight: Delinquency Rate Ticked Up In February
The mortgage delinquency rate in February was 4.21%, down 0.98% compared with January and down 5.51% compared with February 2016, according to Black Knight Financial Services’ most recent First Look report.
Prepayment speeds decreased 15% in February compared with January and decreased 40% compared with February 2016, according to the report.
Driven down by rising interest rates and lower refinance activity, it was the lowest monthly prepayment rate in three years, according to the mortgage software and analytics firm.
About 2.135 million mortgages were delinquent (30 days or more past due) as of the end of the month – a decrease of 27,000 compared with January and a decrease of 117,000 compared with February 2016.
About 641,000 mortgages were seriously delinquent (90 days or more past due) – a decrease of 23,000 compared with the previous month and a decrease of 131,000 compared with a year earlier.
The presale foreclosure inventory rate was about 0.93%, down 1.88% compared with January and down 28.48% compared with February 2016.
As of the end of February, there were about 470,000 homes in the foreclosure presale inventory – a decrease of about 11,000 compared with the previous month and a decrease of about 185,000 compared with a year earlier.
There were about 57,900 foreclosure starts in February – a decrease of 18% compared with the previous month and a decrease of 31% from a year earlier.
OCC: Mortgage Performance Continued To Improve In Q4
The overall performance of first-lien mortgages continued to improve in the fourth quarter, according to the Office of the Comptroller of the Currency (OCC).
About 94.7% of mortgages were current and performing as of the end of the quarter, according to the OCC’s quarterly Mortgage Metrics Report, which measures the performance of about 35% of all residential mortgages outstanding in the U.S.
That’s a significant improvement compared with 94.1% a year earlier.
Mortgage servicers initiated 45,495 new foreclosures in the fourth quarter – a decrease of 5.1% compared with the third quarter and a decrease of 28.2% compared with the fourth quarter of 2015, according to the OCC’s data.
As first-lien mortgage performance improves, the number of loss mitigation actions declines. Servicers covered in the report implemented 32,312 mortgage modifications in the fourth quarter – a decrease of 9.3% compared with the third quarter. More than 89% of the modifications reduced borrowers’ monthly payments.
Black Knight: 4% Of Active Mortgages Are ‘Reperforming’
The number of mortgages classified as “reperforming” – meaning they are currently performing but were previously, at one point or another, more than 120 days delinquent and/or in some stage of foreclosure – has grown to nearly 2 million loans over the last four years, according to a recent report from Black Knight Financial Services.
Today, approximately 4% of active performing mortgages have been either 120 days or more past due or in foreclosure at some point in the past, according to the software firm’s most recent Mortgage Monitor report.
In addition to more reperforming loans (RPLs), the average length of time that an RPL has been reperforming has increased during the past four years. Today, nearly 60% of RPLs have now been reperforming for at least 24 months compared with 54% one year ago and 34% at the end of 2012, Black Knight’s data shows.
The average RPL today has been reperforming for 35 months, which has been trending upward from an average of 12 months at the end of 2010, when the population increased significantly in the wake of the federal government’s Home Affordable Modification Program (HAMP).
A record number of modifications in 2010 pushed the population above the 1 million mark.
Today, though, nearly half of the population is made up of loans brought back to performing status via loan modifications, with 30% being HAMP modifications and other forms of cures representing the remaining 23%.
Black Knight’s data also shows redefault rates within the RPL market as a whole have improved over time, as the market has become more seasoned – but significant variations in performance exist depending on how long the loan had been reperforming, how the loan was brought current, and how many prior modifications there had been on the loan, among other factors.
Although to some it might seem self-evident, the report also shows RPLs are also much less likely to prepay than non-RPL mortgages.
What’s more, loans that became reperforming through modification are much less likely to prepay than non-modified RPLs.
New Jersey Community Capital Buys Pool Of NPLs From Fannie Mae
New Jersey Community Capital, a nonprofit community development financial institution, is the winning bidder on a pool of nonperforming mortgage loans (NPLs) with an unpaid principal balance (UPB) of approximately $26 million recently auctioned by Fannie Mae.
The Community Impact Pool of 158 loans is secured by properties located in the New York and New Jersey area, Fannie Mae says in a release. This is the sixth Community Impact Pool of NPLs the company has auctioned since it began divesting itself of its nonperforming assets in an effort to reduce taxpayer risk, as well as lower operating expenses.
The transaction is expected to close on May 23.
Fannie Mae sold the pool in collaboration with Bank of America Merrill Lynch and The Williams Capital Group LP.
The average loan size for the pool was $164,360. It had a weighted average note rate of 5.29%; a weighted average delinquency of 46 months; and a weighted average broker’s price opinion loan-to-value ratio of 93.46%.
The cover bid price was 50.2% of UPB (46.9% of broker price opinion).
CoreLogic: 1 Million Borrowers Regained Equity In 2016
Thanks to rising home prices, more than 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8% of all mortgaged properties, according to CoreLogic.
That means approximately 48 million homes in the U.S. are now in positive equity.
The firm’s data shows that U.S. homeowners with mortgages (roughly 63% of all homeowners) saw their equity increase by a total of $783 billion in 2016 – an increase of 11.7%.
In the fourth quarter, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2% of all homes with a mortgage. This is a decrease of 2% compared with 3.23 million homes, or 6.3% of all mortgaged properties, in the third quarter.
Year over year, the total number of mortgaged residential properties with negative equity decreased 25%.
Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009.
“Average home equity rose by $13,700 for U.S. homeowners during 2016,” says Frank Nothaft, chief economist for CoreLogic.
He points out that, currently, “about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”
“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” adds Frank Martell, president and CEO of CoreLogic. “The states with the largest home price appreciation last year were Washington and Oregon, at 10.2 percent and 10.3 percent, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively. This is double the pace for the U.S. as a whole. And while statewide home price appreciation was slower in California – at 5.8 percent – the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”
As of the end of the fourth quarter, Texas had the highest percentage of homes with positive equity, at 98.4%, followed by Hawaii (98.1%), Alaska (97.9%), Colorado (97.9%), Oregon (97.9%), Utah (97.9%) and Washington (97.9%).