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JULY 2017 REPORT

MORTGAGE MONITOR

JULY 2017

MORTGAGE MONITOR

CONTENTS 1 | JULY FIRST LOOK RELEASE 2 | JULY MARKET OBSERVATIONS 3 |

HOME PRICE TRENDS

4 |

Q2 2017 MORTGAGE ORIGINATIONS

5 |

APPENDIX

6 |

DISCLOSURES

Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2017 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.

JULY 2017

MORTGAGE MONITOR

JULY 2017 OVERVIEW

Each month, the Black Knight Mortgage Monitor looks at a variety of issues related to the mortgage and financial services industry. This month, as always, we begin with a look at some of the high-level mortgage performance statistics reported in the company’s most recent First Look report, with an update on the latest milestones reached in terms of the foreclosure backlog, as well as delinquency and prepayment trends. Next, we check in on some key market trends for July, taking a closer look at the month’s foreclosure start metrics, while providing an update on the population of potential refinance candidates. Additionally, we assess the impact of the recently announced extension of the federal government’s Home Affordable Refinance Program (HARP) through the end of 2018 as well as the potential effects of Hurricane Harvey on the mortgage market. Then, leveraging data from the Black Knight Home Price Index (HPI), we look at early-2017 home price appreciation, providing a geographically granular view of the landscape and which markets are trending up or down. In addition, we examine areas where condominium appreciation is outpacing that of single family residences (SFRs). Finally, with Q2 2107 origination data in, we examine second quarter mortgage origination volumes and changes in the makeup of that market. In the process, we also look at how much the purchase lending market may still be hampered by more stringent credit requirements enacted in the wake of the Great Recession. In producing the Mortgage Monitor, the Data & Analytics division of Black Knight Financial Services aggregates, analyzes and reports upon the most recently available mortgage performance data from the company’s McDash loan-level database. For more information on McDash or Black Knight Data & Analytics in general, please call 844-474-2537 or email [email protected]. Stay connected with Black Knight Data & Analytics


JULY 2017

MORTGAGE MONITOR

JULY FIRST LOOK RELEASE

Here we have an overview of findings from Black Knight’s ‘First Look’ at July mortgage performance data. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

Jul-17

Month-overmonth change

Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure):

3.90%

2.82%

-13.49%

Total U.S. foreclosure pre-sale inventory rate:

0.78%

-2.96%

-27.96%

Total U.S. foreclosure starts:

53,300

-5.66%

-13.05%

Monthly Prepayment Rate (SMM):

1.01%

-9.59%

-19.94%

Foreclosure Sales as % of 90+:

1.96%

-10.85%

-1.48%

Number of properties that are 30 or more days past due, but not in foreclosure: 1,986,000

Year-over-year change

54,000

-300,000

Number of properties that are 90 or more days past due, but not in foreclosure:

555,000

0

-140,000

Number of properties in foreclosure pre-sale inventory:

398,000

-12,000

-152,000

42,000

-452,000

Number of properties that are 30 or more days past due or in foreclosure: 2,384,000

12 Month Trend

»»

The national delinquency rate rose by 2.8 percent in July, on par with expected seasonal activity, though 90-day delinquencies stayed level from one month ago

»»

July’s 53,300 foreclosure starts mark the second lowest (next to April 2017) monthly volume since the start of 2005

»»

At just 21,000, first time foreclosure starts were the lowest since the turn of the century

»»

Following monthly gains in May and June, prepayment activity fell by nearly 10 percent in July and 20 percent below last year

»»

The monthly declines in prepayment activity were seen in a relatively uniform fashion across investor, credit and vintage bands

»»

Foreclosure inventory fell by 12,000 in July, bringing the total below 400,000 for the first time since February 2007

»»

Active foreclosure inventory has declined by 28 percent (more than 150,000) over the past 12 months


JULY 2017

MORTGAGE MONITOR

Here, we take a closer look at July’s foreclosure start metrics, along with an update on refinance candidates, the impact of the recently announced extension of the Home Affordable Refinance Program (HARP) and the potential impact of Hurricane Harvey on the mortgage market. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

JULY MARKET OBSERVATIONS

Monthly Foreclosure Start Volumes

»»

As mentioned, July saw the second lowest monthly volume of foreclosure starts in more than 12 years

»»

Year-to-date (YTD), just over 400K loans have been referred to foreclosure, the fewest over the first seven months of any year since 2000

»»

Looking at July foreclosure start rates for each state, there is a clear geographical split, with very little foreclosure start activity per capita in the northwestern half of the country

»»

Mississippi, Louisiana and New Jersey have all ranked in the top five states for foreclosure referrals every month thus far in 2017

»»

The situation continues to be geographically driven, with the deep south (along with Florida) and the northeastern states seeing higher inflows

»»

Larger economic issues in the south will make the region a focal point for mortgage delinquencies moving forward

»»

Looking at total foreclosure start volumes (including both first time and repeat foreclosures), repeat foreclosures accounted for 60 percent of all July activity, the second highest share of any month on record

»»

July saw just over 21K first time foreclosure referrals, the fewest since the turn of the century and well below the pre-crisis (2000-2003) monthly average of 65k

350000

300000

250000

200000

150000

100000

July Foreclosure Start Rates*

*Dark blue states had the highest FC start rates in July with foreclosure initiated on more than 1 in every 750 active mortgages

2017-07

2016-07

2015-07

2014-07

2013-07

2012-07

2011-07

2010-07

2009-07

2008-07

2007-07

2006-07

0

2005-07

50000

*Map above depicts the July 2017 foreclosure start rate for each state which is calculated by dividing foreclosure starts by the total number of active mortgages


JULY 2017

MORTGAGE MONITOR

JULY MARKET UPDATES Hurricane Harvey Disaster Area - 2017 (FEMA Declared Disaster Counties) $179B

Hurricane Harvey Disaster Area - 2017 (FEMA Declared Disaster Counties)

»»

Though the situation around Hurricane Harvey continues to evolve, millions of Americans’ lives have been impacted by the storm and immense flooding

»»

The effects on mortgage performance may actually exceed those of Hurricane Katrina in 2005, both due to the magnitude of the rainfall as well as the population of the impacted area

»»

FEMA-designated disaster areas in southeast Texas associated with Hurricane Harvey have over twice as many mortgaged properties as Katrina’s FEMA-designated disaster areas, carrying nearly 4x the unpaid principal balance

1,180,000

Hurricane Harvey Disaster Area - 2017 (FEMA Declared Disaster Counties)

$179B

1,180,000

$179B

Number of Mortgaged 1,180,000 Properties

Outstanding Balance of Mortgages

Hurricane Katrina Disaster Area - 2005 (Louisiana and Mississippi FEMA Disaster Counties)

Number of Mortgaged Properties


Hurricane Katrina Disaster Area - 2005 Outstanding Balance of Mortgages (Louisiana and Mississippi FEMA Disaster Counties)


Hurricane Katrina Disaster Area - 2005 (Louisiana and Mississippi FEMA Disaster Counties)

456,000

$46B

456,000

$46B



456,000

$46B






JULY 2017

MORTGAGE MONITOR

JULY MARKET UPDATES

Active Mortgages in Houston by Investor

»»

Fifty-six percent of loans (661K) in the impacted areas are GSE mortgages, but highdollar lending among portfolio lenders has increased exposure in that segment as well

»»

On average, portfolio loans in the Houston area have $90k higher balances than those held in agency and nonagency securities

»»

Within two months of Hurricane Katrina, the share of borrowers behind on mortgage payments in Louisiana and Mississippi’s FEMA-declared disaster areas increased by 25 percentage points, peaking at over 34 percent

»»

Within four months, the share of borrowers 90 or more days delinquent or in foreclosure had increased by nearly 14 percentage points rising to over 16 percent

»»

A similar impact to the Houston market would result in 300k borrowers missing at least one mortgage payment within the next two months and 160k borrowers becoming seriously delinquent (90+ days past due) within the next four months

661,000

GSE loans account for 55% of all mortgages in the Houston area. The average Portfolio loan in Houston has a balance of $240k compared to $139k for the rest of the market

230,000 189,000

99,000

GSE

GNMA

Portfolio

PRIVATE

Impact of Hurricane Katrina on Mortgage Payments (FEMA Declared Areas in LA and MS) Delinquency Rate

Sev DQ Rate (90+ DQ Including FC)

40.0%

25.0%

Within 4 months of the storm DQs rose by over 7% and the Sev DQ population nearly tripled

Hurricane Katrina

12/1/06

11/1/06

10/1/06

9/1/06

8/1/06

7/1/06

6/1/06

5/1/06

4/1/06

3/1/06

2/1/06

1/1/06

12/1/05

11/1/05

10/1/05

9/1/05

8/1/05

7/1/05

6/1/05

5/1/05

4/1/05

3/1/05

2/1/05

-5.0%

1/1/05

10.0%


JULY 2017

MORTGAGE MONITOR

JULY MARKET UPDATES

Refinance Candidates (Monthly History) Refi Candidates

»»

Despite July’s decline in prepayment activity, refinance opportunities remain at a calendar year high

»»

With the exception of the week of July 13, when interest rates ticked slightly above 4.0 percent, rates have been extremely consistent over the past 12 weeks, with only an ~8BPS variance (15BPS if including the week of July 13th)

»»

Though borrowers continue to refinance (thus removing themselves from this population), the growth in home prices has perfectly offset that decline, a delicate balancing act that has kept the refinance candidate population steady over the past three months

»»

Due to home price growth, the 600K borrowers who refinanced in Q2 2017 have been replaced by roughly the same number of borrowers that now have enough available equity (20 percent or more) to refinance

»»

As of August 17th, 4.41M borrowers both could likely qualify for and have interest rate incentive to refinance, the most of any point in 2017 (but only a hair higher than the steady level seen from late May forward)

Freddie 30 Year Fixed Interest Rate

10M

7.5%

8M

6.0% 6M

4M 4.5%

2017-08

2016-08

2015-08

2014-08

2013-08

2012-08

2011-08

2010-08

2009-08

2008-08

2007-08

2006-08

2005-08

2004-08

2003-08

2002-08

M

2001-08

2M

3.0%

Refinance Candidates (Weekly History) Refi Candidates

Freddie 30 Year Fixed Interest Rate 4.5%

10M

8M

4.0% 6M

4M 3.5%

8/17/17

7/27/17

7/13/17

6/29/17

6/15/17

6/1/17

5/4/17

5/18/17

4/20/17

4/6/17

3/9/17

3/23/17

2/23/17

2/9/17

1/26/17

1/12/17

12/29/16

12/1/16

12/15/16

11/17/16

11/3/16

10/20/16

M

10/6/16

2M

3.0%


JULY 2017

MORTGAGE MONITOR

»»

Though the Home Affordable Refinance Program (HARP) has been extended through 2018, the market impact will likely be limited

»»

As home price gains have helped to increase the number of traditional refinance candidates in the market, they have had the opposite effect on HARP eligibility

»»

As of the latest Federal Housing Finance Agency (FHFA) refinance report, just under 3,500 HARP originations took place in April, accounting for three percent of all refi activity for the month

»»

That represents a slight decline from the 13K quarterly HARP originations in Q4 2016 and Q1 2017 (approximately 4,333/ month)

»»

As 3.5M borrowers have already utilized the program and after years of continual home price gains, the HARPeligible borrower pool is relatively shallow

»»

As of the end of July, only ~108K borrowers would both meet HARP eligibility requirements and have at least 75 BPS of interest rate incentive to refinance through the program

»»

HARP eligibility is limited for the 2.5M active GSE mortgages with current LTVs above 80 percent due to the requirement that loans have been originated prior to June 2009

»»

Even expanding that to the bottom of the housing market in January 2012 – to include all borrowers negatively impacted by the downturn in home prices – would only increase the HARP-eligible/ incented population by approximately 50K

JULY MARKET UPDATES

HARP Refinance Candidates (Since Guideline Expansion in June 2012) 3.5M

3.0M

2.5M The number of HARP eligible borrowers that have interest rate incentive to use the program has declined from over 3 million in June 2012 to just over 108,000 today

2.0M

1.5M

1.0M

.0M

2012-06 2012-08 2012-10 2012-12 2013-02 2013-04 2013-06 2013-08 2013-10 2013-12 2014-02 2014-04 2014-06 2014-08 2014-10 2014-12 2015-02 2015-04 2015-06 2015-08 2015-10 2015-12 2016-02 2016-04 2016-06 2016-08 2016-10 2016-12 2017-03 2017-05 2017-07

.5M

HARP Eligibility Breakdown of Active GSE Mortgages 2,483,000

The largest drop in the eligibility waterfall comes when limiting the population of >80 LTV mortgages to those originated before June 2009. That said, even a modest expansion of the origination cut-off to the bottom of the housing market in January 2012 would have a limited impact on the number of eligible borrowers

352,800 227,600 108,100 Have > 80% Current Originated Before June LTV 2009

Meet Payment Requirements

Have 75BPS of Rate Incentive


JULY 2017

MORTGAGE MONITOR

HOME PRICE TRENDS

Here, we look at home price appreciation trends in early 2017, providing a geographically granular view of the landscape and which markets are trending up or down. In addition, we examine areas where condominium appreciation is outpacing that of single family residences (SFRs). This information has been compiled from the Black Knight Home Price Index and the company’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

Black Knight Home Price Index Monthly Rise in Home Prices (right axis)

»»

That is the fourth fastest start to any year on record dating back to 1994, just behind 2013 (coming out of the housing market bottom) at 6.8 percent, 2005 (8.1 percent) and 2004 (7.7 percent)

»»

The average U.S. property has appreciated by 6.2 percent over the past 12 months, the highest 12-month rate of appreciation since early 2014

»»

Nationally, home price appreciation (HPA) has accelerated by over 60BPS YTD, as the year started with homes appreciating at 5.6 percent annually

»»

Condominiums, which had seen deceleration last summer, have also regained momentum and are appreciating at their fastest pace since late 2014

»»

Condos are still appreciating at a slightly slower pace (5.8 percent annually) than SFRs (6.1 percent)

1.5% 8%

1.0% 6% 0.5%

4% 0.0%

2013

2014

2015

2016

One Month Rise in the Median Home Price

2.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Annual Rate of Home Price Appreciation

The 0.94 percent rise in home prices in June puts the total YTD gain for 2017 at 5.5 percent, meaning the value of the median priced U.S. home has increased by $14.7K over the past six months

Annual Rate of Home Price Appreciation (left axis)

10%

2%

»»

-0.5%

2017


JULY 2017

MORTGAGE MONITOR

HOME PRICE TRENDS

Home prices rising the fastest in West / Northwest

Overall, 22 of the country’s 30 fastest appreciating markets are in the West/Northwest 13 of the top 30 are in Washington (8) or Oregon (5)

10 Fastest Appreciating MSAs

12 Month Increase in June 2017 Increase Home Prices in Home Prices

Seattle, WA

14.3%

1.4%

Salt Lake City, UT

10.3%

1.1%

Nashville, TN

10.0%

1.0%

Las Vegas, NV

10.0%

1.1%

Sacramento, CA

9.8%

1.4%

San Jose, CA

9.4%

1.2%

Dallas, TX

9.1%

0.5%

Buffalo, NY

8.8%

2.0%

Denver, CO

8.7%

1.2%

Portland, OR

8.7%

0.8%

»»

The west and northwest U.S. are seeing the fastest rates of annual HPA overall with 22 of the 30 fastest appreciating metros located west of the Rocky Mountains

»»

In fact, 13 of the top 30 are in Washington and Oregon alone

»»

Seattle, Wash. leads larger markets with home prices up 14.3 percent over the past 12 months, followed by Salt Lake City, Utah, Nashville, Tenn., and Las Vegas, Nev. all seeing home prices rising by 10 percent from one year ago

»»

San Jose, Calif. and Las Vegas have seen the most acceleration in 2017, with annual HPA accelerating by 4.1 percent in San Jose YTD, and Las Vegas’ rate of appreciation jumping from 6.5 percent at the start of the year to 10 percent in June

»»

Of the top 10 markets in terms of annual appreciation, eight have seen home price appreciation accelerate over the first half of 2017

»»

The two exceptions are Denver, Colo. (HPA falling from 10.1 percent in January to 8.7 percent in June) and Portland, Ore. (10.7 percent down to 8.7 percent); despite slowing, both are still appreciating at a faster rate than the national average

»»

Among the 50 largest metro areas 36 have seen HPA rise in 2017, while only 14 metros have seen the rate of appreciation slow

Negative 0% - 4% 4% - 8% 8% or more

Map above depicts the annual rate of home price appreciation for each MSA as of June 2017 according to the Black Knight Home Price Index

Table above includes rankings among the 50 largest MSAs


JULY 2017

MORTGAGE MONITOR

HOME PRICE TRENDS

Southwest and Florida remain the furthest behind their pre-recession home price peaks

»»

In most areas, home prices peaked around mid-2006, then fell steadily downward from 2006, bottoming out in January 2012

»»

At the national level, home prices surpassed their 2006 peak in February 2017 and are now nearly five percent above pre-recession peak values

»»

As of June, 34 states and the District of Columbia have recovered to pre-recession levels or better, along with 29 of the nation’s 50 largest metro markets

»»

The central US has largely fully recovered, with an area reaching from central Texas through Colorado, Nebraska, South Dakota and North Dakota seeing prices up by 15 percent or more from precrisis peaks

»»

Denver and Austin, Dallas, Houston and San Antonio, Texas are all in the top 10 of areas which have surpassed 2006 peaks

»»

In fact, Denver home prices are 53 percent above 2006 levels, while Austin is up 43 percent

»»

Other areas (including inland California, lower Nevada, Arizona and Florida) remain 15 percent or more below 2006 peaks; coastal northeast home prices remain moderately below 2006 levels as well

»»

Las Vegas, though seeing the second highest HPA acceleration of any major metro in the first half of 2017, remains 27 percent below peak levels (the most of the 50 largest metros)

»»

Together, California and Florida account for 20 of the 35 metros areas furthest below 2006 levels

>15% above pre-2012 peak 0%-15% above pre-2012 peak 0%-15% below pre-2012 peak >15% below pre-2012 peak

10 MSAs Furthest Above Pre-2012 Peak vs Current Their Median Home Price Pre-2012 Home Price Peak Denver, CO Austin, TX San Jose, CA Dallas, TX Houston, TX Nashville, TN Buffalo, NY Portland, OR San Francisco, CA San Antonio, TX

53% 43% 42% 42% 30% 29% 27% 25% 24% 22%

6-Month Change in YoY HPA

10 MSAs Furthest Below Their Pre-2012 Home Price Peak

Pre-2012 Peak vs Current Median Home Price

6-Month Change in YoY HPA

-1.4% -0.3% 4.1% 0.2% 0.0% 0.4% 2.5% -1.9% 1.4% -0.6%

Las Vegas, NV Orlando, FL Riverside, CA Phoenix, AZ Jacksonville, FL Miami, FL Tampa, FL Chicago, IL Hartford, CT Baltimore, MD

-27% -21% -18% -17% -16% -15% -15% -13% -12% -11%

3.5% 0.6% 0.6% 0.3% 1.5% -0.4% 0.0% -0.2% 0.5% 0.5%


JULY 2017

MORTGAGE MONITOR

HOME PRICE TRENDS

Las Vegas Home Price Appreciation Las Vegas - Condo

Las Vegas - SFR

National - SFR

»»

The annual rate of HPA in Las Vegas has risen by 3.5 percent so far in 2017 (the second highest acceleration among the top 50 markets, behind only San Jose)

»»

Acceleration in the condo market is much more pronounced, rising by 7.2 percent (from 6.4 to 13.6 percent YTD) over the past six months, dwarfing the 60BPS rise in the national condo HPA rate

»»

On average, condo prices in Las Vegas are up 13.6 percent from last year, more than double the national average (and second only to Seattle’s 17 percent), while SFRs are up 9.7 percent (over 50 percent above the national average)

»»

It’s important to reiterate: even with such home price growth and acceleration, Las Vegas home prices remain 27 percent off their pre-crisis peak

»»

Seattle has the highest HPA rate of any market in the country, in both the SFR (13.7 percent) and condo (17.3 percent) markets

»»

Seattle continues trending upward, with the annual rate of appreciation for condos accelerating by nearly three percent YTD, and nearly two percent for SFRs

»»

The average SFR in Seattle has increased in value by over $50K YTD, with the average condo up by nearly $40k

National - Condo


27%

18% 13.6%

9.7% 9%

0%

Seattle Home Price Appreciation Seattle - Condo

Seattle - SFR

National - SFR

National - Condo


27%

18%

17.3% 13.7%

9%

0%


JULY 2017

MORTGAGE MONITOR

HOME PRICE TRENDS

Denver Home Price Appreciation Denver - Condo

Denver - SFR

National - SFR

»»

Denver and Austin are the top two metros, respectively, with current home prices furthest above 2006 local market peaks

»»

As mentioned, Denver is 53 percent above its 2006 peak and still appreciating at a rate well above the national average for both condos and SFRs

»»

There has been some slowing, with Denver’s annual rate of HPI decelerating by two percent among condos and over one percent among SFRs YTD

»»

Note: though not specifically depicted here, the trend lines for Portland are very similar to what we see in Denver, with appreciation slowing in both the SFR and condo markets while remaining above the national average

»»

Austin ranks second nationally when comparing current home price levels to 2006 peaks (up 43 percent), but there’s been deceleration in that market over the past two years as well

»»

In fact, the rates of both condo and SFR HPA in Austin have now fallen below the national average

National - Condo


20%

15%

10%

11.0% 8.2%

5%

0%

Austin Home Price Appreciation Austin - Condo

Austin - SFR

National - SFR

National - Condo


20%

15%

10%

5% 5.4%

0%


JULY 2017

MORTGAGE MONITOR

»»

Among the 50 largest markets, SFRs are appreciating faster than condos by one percent or more in 12, while condos are appreciating faster in 13

»»

In coastal areas, SFRs tend to be either appreciating at the same, or a faster rate than condos

»»

This is particularly noticeable in Florida, where home price appreciation (especially among SFRs) is above the national average in many areas but condo appreciation is lagging markedly behind that of SFRs

»»

In Miami, Fla., for example, the average SFR has risen by 6.8 percent year-over-year, while the average condo has only gained 2.7 percent

»»

San Diego and Santa Rosa, Calif. are two of a handful of coastal areas where condo prices are rising faster than that of SFRs

»»

SFR appreciation is currently outpacing that of condos in the northeast as well, with the largest difference seen in Buffalo, N.Y. where SFR appreciation is over five percent higher than condos

»»

In the New York City metro area, SFRs are appreciating at a 2.2 percent higher rate than condos, while in Philadelphia the difference is two percent in favor of SFRs

»»

One noticeable northeastern exception is Boston, where condos are appreciating one percent faster than SFRs

»»

On the opposite end of the spectrum, other areas are seeing markedly higher levels of annual HPA among condos; Las Vegas (3.9 percent above SFRs), Seattle (3.3 percent above) and Denver (up 2.8 percent)

HOME PRICE TRENDS

Single Family home price gains outpacing condos in the Northeast and many coastal areas

Buffalo, NY SFR: +8.3% Condo: +3.1% SFR Higher by 5.2%

Seattle, WA SFR: +13.7% Condo: +17.3% Condos Higher by 3.6%

New York/Newark SFR: +6.5% Condo: +4.4% SFR Higher by 2.1%

San Francisco, CA SFR: +8.7% Condo: +7.3% SFR Higher by 1.5%

Las Vegas, NV SFR: +9.7% Condo: +13.6% Condos Higher by 3.9%

Denver, CO SFR: +8.2% Condo: +11.0% Condos Higher by 2.8%

Miami, FL SFR: +6.8% Condo: +2.7% SFR Higher by 4.2%

Areas where Single Family homes are appreciating faster than Condos ( >1% difference) Areas where Condos are appreciating faster than Single Family homes ( >1% difference)


JULY 2017

MORTGAGE MONITOR

Here, we examine second quarter mortgage origination volumes and look at how much purchase lending may still be hampered by tight lending standards. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.


First Lien Mortgage Origination Volumes (in $Billions) Purchase Originations

»»

Quarterly origination data showed positive growth in lending in Q2 2107, with $467 billion in first lien mortgages originated, down 16 percent from a year ago, but up 20 percent over Q1

»»

Refinance lending made up just 31 percent of all Q2 originations – the lowest such share in over 16 years

»»

Refinance volumes fell 20 percent from Q1 (a $37B decline), but that drop was more than offset by a 57 percent (up $117B) seasonal rise in purchase lending

Refinance Originations

$1,200

$1,000

$800

$600

$400

$0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

$200

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


JULY 2017

MORTGAGE MONITOR

»»

$321B in purchase loans were originated in Q2 2017, up six percent from one year ago and the highest quarterly volume since 2007

»»

Originations were up 57 percent from the first quarter, a fairly typical seasonal increase

»»

Purchase originations are now 120 percent above the bottom of the market (Q2 2017 vs. Q2 2011) and are more than 30 percent above the 2000-2003 average in terms of total dollars lent

»»

However, when analyzing the number of purchase loans being originated, total purchase origination counts still lag pre-crisis averages by almost 30 percent

»»

The reason for these varying trends (between origination counts and total dollars lent) is that the average loan amount of purchase originations continues to rise, sitting near an all-time high of $286K in Q2 2017

»»

This is partly due to rising home prices, but is more decidedly a result of allbut-non-existent second lien usage among purchase transactions

»»

The net effect is more leverage – thus higher average loan amounts – on the first lien side, especially among the growing number of lower down payment purchase transactions, as was reported in the June Mortgage Monitor

»»

While purchase originations appear strong from a total dollar amount perspective, the market still does not appear to be performing at peak capacity when looking at purchase origination counts

Q2 2017 MORTGAGE ORIGINATIONS Purchase Origination Volume $500

Purchase origination volumes ($) are well above pre-bubble (2000-2003) levels

$321

$400

$300

$200

$0

2000-Q2 2000-Q3 2000-Q4 2001-Q1 2001-Q2 2001-Q3 2001-Q4 2002-Q1 2002-Q2 2002-Q3 2002-Q4 2003-Q1 2003-Q2 2003-Q3 2003-Q4 2004-Q1 2004-Q2 2004-Q3 2004-Q4 2005-Q1 2005-Q2 2005-Q3 2005-Q4 2006-Q1 2006-Q2 2006-Q3 2006-Q4 2007-Q1 2007-Q2 2007-Q3 2007-Q4 2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2

$100

Purchase Origination Loan Count 2.5M

but the number of purchase loans being originated remains well below ‘normal’ 1.1M

1.6M

1.5M

1.5M

1.4M

2.0M

1.0M

.0M

$300K


.5M

Average Purchase Loan Amount

$286K

$250K

$200K

$100K

The difference is due to rising average loan amounts among purchase originations which at $286,000 on average in Q2 2017 are near an all time high


$150K


JULY 2017

MORTGAGE MONITOR


Distribution of Q2 Purchase Originations by Credit Score Bucket < 620

620-659

660-719

»»

One key contributor to the constrained purchase market is the more stringent credit requirements enacted in response to the financial crisis

»»

Consider that borrowers with credit scores of 720 or higher accounted for 74 percent of all Q2 2017 purchase loans as compared to a pre-crisis average of 47 percent

»»

Pre-crisis, 27 percent of purchase lending was to borrowers with 660-719 credit scores and 26 percent to those with credit scores below 660

»»

Today, there are 65 percent fewer purchase loans being originated to borrowers with credit scores below 720 than in those years

»»

The lack of credit availability for those borrowers is causing a strong headwind for the purchase market

»»

Using 2000-2003 averages as a measure, as many as 645K purchase loans were not originated in Q2 due to tighter lending standards

»»

To put it another way, the purchase market is operating at less than two-thirds of peak capacity because of these factors

>= 720

47%

74%

27%

13% 20% 13% 5% 2000-2003 Average

2017

Second Quarter Purchase Originations by Credit Score Bucket 2000-2003 Average

2017

900K

750K

600K

The number of purchase loans being originated to borrowers with 720+ credit scores is 14% above 2000-2003 levels, while purchase loans to lower credit classes remain 65% below their 2000-2003 averages

450K

300K

150K

K

= 720


JULY 2017

MORTGAGE MONITOR

APPENDIX

Jun-17

Monthly Change

YTD Change

Yearly Change

Delinquencies

3.90%

2.82%

-8.14%

-13.49%

Foreclosure

0.78%

-2.96%

-17.22%

-27.96%

Foreclosure Starts

53,300

-5.66%

-24.29%

-13.05%

Seriously Delinquent (90+) or in Foreclosure

1.87%

-1.25%

-16.70%

-23.76%

New Originations (data as of May-17)

622K

5.4%

-3.8%

-13.1%

»»

Jul-17

Jun-17

May-17

Apr-17

Mar-17

Feb-17

Jan-17

Dec-16

Nov-16

Oct-16

Sep-16

Aug-16

Jul-16

Delinquencies

3.90%

3.80%

3.79%

4.08%

3.62%

4.21%

4.25%

4.42%

4.46%

4.35%

4.27%

4.24%

4.51%

Foreclosure

0.78%

0.81%

0.83%

0.85%

0.88%

0.93%

0.94%

0.95%

0.98%

0.99%

1.00%

1.04%

1.09%

Foreclosure Starts

53,300

56,500

55,800

52,800

60,300

57,900

70,400

59,700

60,400

56,500

61,700

68,800

61,300

Seriously Delinquent (90+) or in Foreclosure

1.87%

1.90%

1.93%

2.00%

2.05%

2.19%

2.25%

2.29%

2.33%

2.33%

2.32%

2.36%

2.46%

622K

590K

504K

549K

429K

476K

646K

652K

694K

723K

763K

635K

622K

590K

504K

549K

429K

476K

646K

723K

763K

635K

3.90%

3.80%

3.79%

4.08%

3.62%

4.25%

4.21%

4.42%

4.46%

4.35%

4.27%

4.24%

4.51%

652K

New Originations

Total Delinquencies

694K

New Originations

July 2017 Data Summary


JULY 2017

MORTGAGE MONITOR

APPENDIX

Month

TOTAL ACTIVE COUNT

30 DAYS

60 DAYS

90+ DAYS

FC

Total NonCurrent

Average Days Average Days Ratio of 90+ FC Starts Delinquent for Delinquent for to FC 90+ FC

1/31/05

47,706,128

1,197,062

339,920

458,719

276,745

2,272,446

50,922

242

324

165.8%

1/31/06

50,900,620

1,242,434

387,907

542,378

258,613

2,431,332

76,477

207

308

209.7%

1/31/07

53,900,458

1,425,030

468,441

551,439

393,973

2,838,883

117,419

203

267

140.0%

1/31/08

55,478,782

1,743,420

676,266

950,639

813,560

4,183,885

195,033

190

256

116.8%

1/31/09

55,788,441

2,001,314

932,436

1,878,981

1,321,029

6,133,760

250,621

193

323

142.2%

1/31/10

55,098,009

1,945,589

903,778

2,972,983

2,068,572

7,890,922

292,308

253

418

143.7%

1/31/11

53,861,778

1,750,601

746,634

2,078,130

2,245,250

6,820,615

277,374

333

527

92.6%

1/31/12

52,687,781

1,592,463

652,524

1,796,698

2,205,818

6,247,503

223,394

395

666

81.5%

1/31/13

51,229,692

1,464,583

587,661

1,551,415

1,742,689

5,346,348

156,654

460

803

89.0%

1/31/14

50,380,779

1,341,074

529,524

1,278,955

1,213,046

4,362,599

97,467

486

935

105.4%

1/31/15

50,412,744

1,238,453

465,849

1,060,002

884,901

3,649,204

93,280

509

1,031

119.8%

1/31/16

50,541,353

1,298,682

444,594

831,284

659,237

3,233,797

71,900

495

1,047

126.1%

1/31/17

50,871,357

1,108,712

389,768

663,521

480,598

2,642,599

70,357

454

1,013

138.1%

2/28/17

50,729,433

1,124,037

369,946

640,797

470,259

2,605,038

57,948

456

1,004

136.3%

3/31/17

50,649,333

923,503

319,382

588,520

447,942

2,279,346

60,342

476

1,007

131.4%

4/30/17

50,753,090

1,150,918

340,008

581,464

433,278

2,505,669

52,769

471

1,007

134.2%

5/31/17

50,822,103

1,023,548

342,106

561,556

420,975

2,348,185

55,798

477

1,006

133.4%

6/30/17

50,875,908

1,031,476

344,883

555,183

410,018

2,341,560

56,496

472

999

135.4%

7/31/17

50,885,842

1,069,321

361,762

555,391

397,953

2,384,427

53,321

457

1,001

139.6%

»»

Loan counts and average days delinquent


JULY 2017

MORTGAGE MONITOR

APPENDIX

Yr/Yr NonChange in Curr % NC%

State

Del %

FC %

National

3.9%

0.78%

4.7%

MS

9.7%

0.8%

7.5%

AL WV

LA

*


State

Del %

FC %

-16.3%

National

3.9%

0.78%

4.7%

10.5%

-10.5%

MD

*

4.7%

0.9%

1.2%

8.8%

-9.2%

OH

*

4.5%

6.6%

0.6%

7.2%

-11.9%

TX

6.2%

0.8%

7.0%

-15.9%

NM


State

Del %

FC %

-16.3%

National

3.9%

0.78%

4.7%

-16.3%

5.6%

-14.8%

NV

3.0%

1.0%

4.0%

-22.4%

1.0%

5.5%

-14.4%

WY

3.5%

0.5%

4.0%

-7.7%

5.0%

0.5%

5.5%

-10.6%

DC

2.8%

1.2%

3.9%

-23.0%

*

3.9%

1.4%

5.3%

-15.9%

VA

3.5%

0.3%

3.8%

-14.8%

3.1%

0.4%

3.5%

3.4%

3.2%

0.3%

3.5%

-9.3%

ME

*

4.6%

2.0%

6.6%

-17.6%

FL

*

3.9%

1.4%

5.2%

-20.5%

AK

NY

*

4.1%

2.4%

6.5%

-19.3%

HI

*

2.9%

2.2%

5.1%

-20.0%

NE

NJ

*

4.3%

2.1%

6.4%

-27.7%

VT

*

3.5%

1.5%

4.9%

-13.9%

UT

2.9%

0.3%

3.2%

-20.2%

IN

*

5.4%

1.0%

6.4%

-12.5%

NC

4.4%

0.5%

4.9%

-15.0%

AZ

2.8%

0.3%

3.1%

-13.7%

RI

5.1%

1.2%

6.3%

-18.1%

KY

4.0%

0.9%

4.9%

-14.1%

SD

2.4%

0.5%

2.9%

-7.3%

AR

5.6%

0.6%

6.2%

-11.4%

MA

3.9%

0.9%

4.8%

-19.0%

CA

2.6%

0.3%

2.9%

-16.9%

*

*

*

PA

*

5.1%

1.1%

6.1%

-14.0%

KS

*

4.3%

0.6%

4.8%

-13.1%

WA

2.3%

0.5%

2.8%

-22.7%

OK

*

5.0%

1.1%

6.1%

-15.4%

IL

*

3.7%

1.0%

4.8%

-13.8%

ID

2.3%

0.4%

2.7%

-17.3%

DE

*

4.7%

1.2%

6.0%

-16.1%

MO

4.2%

0.3%

4.6%

-15.9%

MT

2.3%

0.4%

2.7%

-13.1%

CT

*

4.5%

1.4%

5.8%

-14.4%

WI

3.5%

0.8%

4.3%

-14.4%

OR

2.0%

0.6%

2.6%

-24.7%

GA

5.3%

0.5%

5.7%

-15.4%

MI

4.0%

0.3%

4.3%

-12.5%

MN

2.3%

0.2%

2.5%

-13.3%

TN

5.3%

0.4%

5.7%

-15.4%

NH

3.6%

0.5%

4.1%

-15.9%

ND

1.7%

0.6%

2.3%

-10.3%

SC * 4.7% 0.9% * - Indicates Judicial State

5.6%

-14.8%

IA

3.3%

0.7%

4.0%

-12.9%

CO

2.0%

0.2%

2.2%

-20.0%

*

*

*

»»

State-by-state rankings by non-current loan population


JULY 2017

MORTGAGE MONITOR

DISCLOSURES

Please refer to the links below for specific disclosures relating to Product Definitions, Metrics Definitions and Extrapolation Methodology.

>> PRODUCT DEFINITIONS >> METRICS DEFINITIONS >> EXTRAPOLATION METHODOLOGY
