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Mortgage Monitor December 2013

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Mortgage Monitor December 2013

  1. 1. Black Knight Mortgage Monitor Mortgage Market Performance Observations Data as of December, 2013 Month-end Black Knight Financial Services
  2. 2. Focus Points  Focus 1: Mortgage Performance Update and Yearend Review  Focus 2: Originations, Underwriting Standards and Credit Quality  Focus 3: Home Prices, Property Sales and Negative Equity Black Knight Financial Services 2
  3. 3. Focus Point 1: Mortgage Performance Update and Year-end Review  Market has experienced years of significant and sustained improvement in DQ and FC inventories  Delinquencies are now just 1.5x the pre-crisis average with foreclosures 4.6x (down from over 8)  Foreclosure starts ended the year at the lowest level since April 2007 and pipelines are clearing in most states  Sizeable delinquent inventories remain in the north- and south-east Black Knight Financial Services 3
  4. 4. Market has experienced four years of significant, sustained improvement in DQ %s and two in FC %s Foreclosure inventory dropped ~30% in 2013 Black Knight Financial Services 4
  5. 5. Delinquencies are now just 1.5x pre-crisis average; Foreclosures are 4.6x 90+ Delinquencies down 14% in judicial states vs. 21% in nonjudicial over 2013 Judicial foreclosure inventories are 3.5x non-judicial Black Knight Financial Services 5
  6. 6. Foreclosure starts ended the year at the lowest level since April 2007 Black Knight Financial Services 6
  7. 7. Pipelines are clearing, even in (most) states with judicial or legislative slow-downs Change since June ‘13 Massachusetts: -49% New Jersey: -37% Oregon: -36% Hawaii: -52% California: +36% Connecticut: -42% New York: -39% Maryland: -44% Black Knight Financial Services 7
  8. 8. Non-current %: NJ and NY now on par with FL and NV, 2x rates in CA and AZ Black Knight Financial Services 8
  9. 9. Focus Point 2: Originations, Underwriting Standards and Credit Quality  Prepayment rates remained low through October – November rate decline  Rates and seasonality pushed monthly originations to the lowest level since 2008  Underwriting criteria is still very strict with “looser” credit standards primarily focused on the refinance population (compensated by lower LTV)  As a result, performance of recent vintages is exceptional Black Knight Financial Services 9
  10. 10. Prepayment rates remain low despite recent decline in rates Black Knight Financial Services 10
  11. 11. Higher interest rates and seasonality pushed originations to the lowest level since 2008 At over 16%, non-gov’t participation was the highest since 2007 Black Knight Financial Services 11
  12. 12. Underwriting criteria is still very strict compared to pre-bubble vintages Black Knight Financial Services 12
  13. 13. “Looser” credit standards are focused primarily on the refinance population Refis offer greater LTV risk protection Vintage Refinance 2010 74 66 2011 76 67 2012 77 74 2013 Black Knight Financial Services Purchase 78 71 13
  14. 14. As a result of tighter underwriting, 2013 is the best performing vintage on record Black Knight Financial Services 14
  15. 15. Home equity originations are up significantly vs. a year ago 100% = unchanged vs. last year Black Knight Financial Services 15
  16. 16. Focus Point 3: Home Prices, Property Sales and Negative Equity  2013 sales were the strongest since 2007 while national home prices continue to improve  Non-judicial state home prices are recovering faster than judicial states with associated new problem loan rates showing greater improvement  With home price improvement and delinquent inventory liquidation, negative equity continues to improve, but less so where the foreclosure process is slower Black Knight Financial Services 16
  17. 17. Sales volumes have declined, but 2013 was a very strong year Sales through November 2013 outnumber full year ‘10, ‘11 & ‘12 Conservative estimates indicate best year since 2007 Black Knight Financial Services 17
  18. 18. National home prices continue to improve Black Knight Financial Services 18
  19. 19. Non-judicial state home prices are recovering faster than judicial states Black Knight Financial Services 19
  20. 20. Negative equity continues to improve; but more slowly where FC process is slower Change since Dec-12 Nevada: -43% Florida: -29% Georgia: -47% Illinois: -39% New Jersey: -11% Rhode Island: -19% (Not shown) Arizona: -39% California:-50% Over 75% of 90+ delinquencies and loans in foreclosure are “underwater” Black Knight Financial Services 20
  21. 21. New problem loan rates are showing greater improvement in non-judicial states as well Black Knight Financial Services 21
  22. 22. BKFS Mortgage Monitor Appendix Data as of December, 2013 Month-end Black Knight Financial Services
  23. 23. December 2013 Data Summary Black Knight Financial Services 23
  24. 24. Seven of the top 10 states for total non-current are judicial Black Knight Financial Services 24
  25. 25. Loan counts and average days delinquent Black Knight Financial Services 25
  26. 26. BKFS Mortgage Monitor Disclosures: Product / Metric Definitions and Market Sizing Black Knight Financial Services
  27. 27. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Black Knight Financial Services 27
  28. 28. 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 28
  29. 29. 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 29

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