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Mortgage Delinquency Hit 4.1 Percent in October

The rate of mortgages that were in delinquency was 4.1 percent in October. Delinquency is defined as 30 days or more past due including in foreclosure. In the same time period a year earlier, the rate was 5.1 percent, according to the “Loan Performance Insights Report” from CoreLogic. This was the lowest for the month of October in at least 18 years.

As of October 2018, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.5 percent, down 0.1 percentage point since October 2017. The October 2018 foreclosure inventory rate tied with the April, May, June, July, August and September rates this year as the lowest for any month since September 2006 and also marked the lowest rate in October since 2005. In both instances, the foreclosure inventory rate was 0.5 percent.

[caption id="attachment_8990" align="alignright" width="200"] Nothaft: Natural disasters have caused loan defaults to increase.[/caption]

The rate for early stage delinquencies, defined as 30 to 59 days past due, was 1.9 percent in October 2018, down from 2.3 percent in October 2017. The share of mortgages that were 60 to 89 days past due in October 2018 was 0.7 percent, down from 0.9 percent in October 2017. The serious delinquency rate, defined as 90 days or more past due, including loans in foreclosure, was 1.5 percent in October 2018, down from 1.9 percent in October 2017.

This serious delinquency rate was the lowest for an October since 2006 when it was 1.5 percent. It ties August and September 2018 as the lowest for any month since March 2007 when it was also 1.5 percent.

Because early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from

current to 30 days past due was 0.8 percent in October 2018, down from 1.1 percent in October 2017. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent, while it peaked in November 2008 at 2 percent.

“While the strong economy has helped families stay current and push overall delinquency rates lower, areas that were hit hard by natural disasters have seen a rise in loan defaults,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The 30-day delinquency rate in the Panama City, Fla., metro area tripled between September and October 2018 as a result of Hurricane Michael. Two months after Hurricane Florence made landfall in the Carolinas, 60-day delinquency rates doubled in the Jacksonville, Wilmington, New Bern and Myrtle Beach metro areas. And buffeted by Kilauea’s eruption in the Hawaiian Islands, serious delinquency rates jumped on the Big Island by 9 percent between June and October 2018, while falling by 4 percent in the rest of Hawaii.”

Hurricane Irma in 2017 and Hurricane Florence in 2018 continue to affect some metropolitan areas, with mortgages transitioning from current to 30 days past due. This October, 18 metropolitan areas posted an annual increase in overall delinquency rate, seven of which were either in North or South Carolina. In the coming months, CoreLogic will continue to monitor these and other metros struck by natural disaster for potential increase in delinquencies.

“Despite some regional spikes related to hurricane and fire impacted areas, overall delinquency rates are near or at historic lows,” said Frank Martell, president and CEO of CoreLogic.

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Ginnie’s Bright Leaving for Private Sector Post

Michael Bright, executive vice president and COO of Ginnie Mae, has accepted a position in the private sector and will resign from his position on January 16. Bright will serve as CEO of the Structured Finance Industry Group, a trade group. Maren Kasper, executive vice president of Ginnie Mae, will step in as acting president once Bright leaves. Kasper joined Ginnie Mae in June 2017.

His resignation follows those of Pam Patenaude, a Housing and Urban Development deputy HUD secretary; and Mel Watt, director of the Federal Housing Finance Agency, who left after five years in his post. With Bright moving on, Ginnie Mae, FHFA, Fannie Mae and Freddie Mac will be led by new people in 2019.

In his resignation letter, Bright wrote, “As you are aware, over the past two years Ginnie Mae’s total outstanding portfolio crossed the $2 trillion mark, and last year we served 1.9 million American families as they purchased or refinanced a home… “We have worked to police the prepayment speeds of our bonds, taking continuous efforts to ensure as much homogeneity and predictability across pools as possible. We have also enhanced the oversight of those who do business with Ginnie Mae, and, therefore, do business with the American taxpayer.”

"I want to thank Michael for his many contributions to Ginnie Mae over the last two years," said Ben Carson, secretary of Housing and Urban Development. "He has assembled a first-rate team and successfully managed and expanded a portfolio that enables millions of Americans to become homeowners each year. We wish him the best in his future."

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Black Knight: Refis Make Sense for an Additional 550K Homeowners

The number of homeowners with mortgages who could likely qualify for and see at least a 0.75 percent interest rate reduction by refinancing has increased by around 550,000, due to the 30-year fixed rate falling to 4.55 percent as of the end of December, according to the Mortgage Monitor Report from Black Knight Inc.

[caption id="attachment_8962" align="alignright" width="339"] Homes over the past four months have experienced the slowest annual appreciation rates in about three years.[/caption]

Although the number represents a relatively small share of outstanding mortgages, it’s a sizeable increase from recent lows in the size of the population that is eligible for refinancing, but a relatively small share of outstanding mortgages.

"As recently as last month, the size of the refinanceable population fell to a 10-year low as interest rates hit multi-year highs," said Ben Graboske, executive vice president of Black Knight's Data and Analytics division. “Even so, at 2.43 million, the refinanceable population is still down nearly 50 percent from last year. Still, the increase does represent a 29 percent rise from that 10-year low, which may provide some solace to a refinance market still reeling from multiple quarters of historically low--and declining--volumes.”

In fact, through the third quarter of 2018, refinances made up just 36 percent of mortgage originations, an 18-year low. And of course, as refinances decline, the purchase share of the market rises correspondingly. So now, in the most purchase-dominant market experienced in this century, the question is whether the shift in originations will have any effect on mortgage performance.

The short answer, based on historical trends, is that it bears close watching. Refinances have tended to perform better than purchase mortgages in recent years.

According to Black Knight, a market blend matching today's would have resulted in an increase in the number of non-current mortgages by anywhere from two percent in 2017 to more than a 30 percent rise in 2012, when refinances made up more than 70 percent of all lending.

The latest data from the Black Knight Home Price Index, shows that the flattening home-price growth over the last four months has led to the slowest annual appreciation rates in around three years. While the slowing has been observed across the majority of the country, western states--led by California--are seeing the most deceleration.

The annual rate of appreciation in California has slowed from over 10 percent as recently as February 2018 to less than 5 percent as of October 2018, falling below the national average for the first time since the housing recovery began. Washington's decline has been similar, though it remains above the national average. Appreciation there has fallen from 12.4 percent annually in February to just 7.5 percent as of October.

Total U.S. loan delinquency rate: 3.71%
Month-over-month change in delinquency rate: 1.78%
Total U.S. foreclosure pre-sale inventory rate: 0.52%
Month-over-month change in foreclosure pre-sale inventory rate: -0.22%
States with highest percentage of non-current* loans: MS, LA, AL, AR, WV
States with lowest percentage of non-current* loans: ID, CA, WA, OR, CO
States with highest percentage of seriously delinquent** loans: MS, LA, AR, AL, TN

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
**Seriously delinquent loans are those past-due 90 days or more.
Totals are extrapolated based on Black Knight’s loan-level database of mortgage assets.

 

 

 

 

 

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