It’s not breaking news that the U.S. is in a housing crisis. Report after report has explained how inventory is in short supply causing housing prices to surge, but what can be done to begin to fix the problem? This coming week, the United States Senate will meet to discuss just that. At the finance meeting Tuesday, August 1, the Senate will be examining America’s affordable housing crisis, focusing on the challenges that surround it and possible solutions.
The meeting will commence at 10 a.m. EDT, SD-215. To see live footage, click here.
Wells Fargo has had a tough time when it comes to lawsuits as of late, but their latest issue concerning malfeasance related to mortgage lending could possibly result in shareholders, Bloomberg. See why in the Video Spotlight.
American homeowners might be getting better at paying their mortgage—at least second quarter results make it seem that way.
Q2 of 2017 reflected the lowest delinquency rates since the recession, according to a recent report by Transunion, dropping below 2 percent for the first time in almost 10 years. In Q2 2017, the rate came in at 1.92 percent, which was down from 2.30 percent in Q2 of 2016. Joe Mellmen, SVP and Mortgage Business Leader for TransUnion explained since delinquency rates reached 7 percent in the recession, rates have had more trouble recovering.
“We’re now at the lowest delinquency levels in nearly a decade, and we anticipate those levels will remain low through the rest of this year,” Mellman said.
As far as the risk associated with mortgage originations in the second quarter of 2017, over 83 percent were in the prime and above risk tiers. They remained relatively steady, according to the report, rising slightly from 1.46 million in Q1 2016 to 1.49 million in Q2 of 2017. On average, account balances declined 1.6 percent from $223,262 in Q1 2016 to $219,743 in Q1 2017.
“Average new account balances tend to be larger for refinance transactions as opposed to purchase transactions, because consumers with higher loan amounts can realize greater benefits from lowering interest rates and/or loan term extension,” said Mellman. “As interest rates rise, refi activity declines. This year, we have observed that reduction, leading to lower average new account balances.”
Fannie Mae and Freddie Mac wrapped up 15,683 foreclosure prevention actions in May, according to the Federal Housing Finance Agency (FHFA) May Foreclosure Prevention Report. This brings the total number of foreclosure prevention actions to 3,914,668 since the inception of the conservatorships back in September 2008. More than half of the actions reported for May—or 10,769—were permanent loan modifications, compared with 11,328 in April. All told, since September 2008, the Enterprises have granted permanent loan mods to 2,076,345 distressed homeowners.
Along those same lines, the share of modifications with principal forbearance accounted for 25 percent of all permanent modifications in May, according to the report. Modifications with extend-term only leapt to 45 percent during the month thanks to ongoing positive headwinds in house prices. Additionally, a combined 1,489 short sales and deeds-in-lieu sealed in May. There were 10 percent more—or 1,650—in April.
As for the Enterprises mortgage performance metrics, the serious delinquency rate spiraled down further, plunging from 1.01 percent at the close of April to 0.98 percent at the end of May. Loans 30–59 days’ delinquent charted at 402,780 in April; they stood at 348,141 in May. Continuing their downward trajectory, 60-plus-days’ delinquent loans hit 1.3 percent in May, decreasing from April’s 1.34 percent.
In terms of Fannie and Freddie foreclosures, third-party and foreclosure sales jumped 9 percent, from 5,523 in April to 6,042 in May. Foreclosure starts tumbled 13 percent from 17,056 in April to 14,905 in May.
The top five reasons for delinquency in May included curtailment of income (21 percent), excessive obligations (22 percent), unemployment (7 percent), illness of principal mortgagor or family member (6 percent), and marital difficulties (3 percent). www.teamthayer.com
Delinquency rates have dropped year-over-year, according to the May 2017 Loan Performance Insights Report from CoreLogic. In May 2017, 4.5 percent of mortgages were in delinquency, compared to 5.3 percent in May 2016, a 0.8 percent decline.
CoreLogic notes the importance of measuring delinquency rates, especially early-stage rates, to determining the health of the mortgage market. In addition to delinquency rates, CoreLogic also measures transition rates, an indication of the percentage of mortgages moving from one stage to the next.
“Strong employment growth and home price increases have contributed to improved mortgage performance,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “Early-stage delinquencies are hovering around 17-year lows, and the current-to-30-day past due transition rate remained low at 0.8 percent. However, the same positive economic conditions helping performance have also contributed to a lack of affordable supply, creating challenges for homebuyers.”
The current-to-30-day past due transition rate of 0.8 percent is a slight drop year-over-year from May 2016’s rate of 0.9 percent.
The foreclosure inventory has dropped year-over-year as well, falling from 1 percent in May 2016 to 0.7 percent in May 2017. The rate for early-stage delinquencies, defined as 30-59 days past due, was 1.9 percent in May 2017, down from 2 percent in May 2016. The share of mortgages that were 60-89 days past due in May 2017 was 0.63 percent, down slightly from 0.66 percent in May 2016. In addition, CoreLogic reports that the serious delinquency rate (90 days or more past due) currently sits at 2 percent, the lowest percentage since November 2017.
“A prolonged period of relatively tight underwriting criteria has driven delinquencies down to pre-crisis levels across many parts of the country,” said Frank Martell, President and CEO of CoreLogic. “As pressure to relax underwriting standards increases, the industry needs to proceed carefully and take progressive, sensible actions that protect hard-fought improvements in mortgage performance.”