Black Knight's July Mortgage Data: At Least 2.5M HELOC Resets Face Average $250/Month Increase; Home Retention Actions High Relative to Distressed Inventory
- "Payment shock" on resetting HELOCs over next three years still a concern; average $250/month increase
- Assessment based on current balances; additional draws on HELOCs would increase level of "payment shock"
- Home retention activity is at a record high, relative to distressed loan inventory
- New problem loan rates lowest since at least the start of 2005
JACKSONVILLE, Fla., Sept. 2, 2014 /PRNewswire/ -- Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, based on data as of the end of July 2014. Looking at the landscape of active Home Equity Lines of Credit (HELOCs), Black Knight found that at least 2.5 million borrowers whose lines of credit are poised to reset over the next three years will be facing an average increase of $250 per month in their payments. According to Kostya Gradushy, Black Knight's manager of Research and Analytics, this average is based on current HELOC balances. As Gradushy explains, depending upon borrower behavior between now and time of reset, payment increases could change.
"Black Knight's analysis of outstanding HELOCs that have yet to reset – some 2.5 million between 2015 and 2017 – is based upon current utilization ratios," said Gradushy. "Currently, borrowers whose HELOCs will reset over the next three years are utilizing just under 60 percent of their available credit. Further draws on these lines – for those that have not been locked – could result in 'payment shock' after they are reset that is even higher than the national average of $250 per month. Looking further down the road, HELOCs not likely to reset until 2019 are exhibiting even lower utilization ratios - about 40 percent of available credit. Upon reset, those borrowers are currently facing average monthly increases of $200. Should their drawing pattern match that of older vintages, we could be looking at a significantly higher risk of 'payment shock' for this segment.
"We also looked at current levels of banks' home retention activity and, while the volume of modifications, trial modifications and payment plans has declined along with delinquencies and foreclosures, we found retention activity is still high relative to current levels of distressed loan inventory. On a state-by-state basis, home retention activity does not always correlate with the amount of distressed inventory. Such activity is much higher, for example, in California – where nearly 12 percent of distressed loans were the focus of some form of retention efforts – than in any of the other states in the top five ranked by distressed inventory. In contrast, in the other four states in the top five (Fla., N.Y., N.J. and Ill.) just over six percent of loans on average saw home retention actions."
July's data also showed continued improvement in new problem loans, which, at 0.6% of active loans, are now firmly back to 2005-2006 levels. Likewise, "roll rates" (the number of loans that shift from current into progressively more delinquent statuses) have been improving over the long term across all categories. Black Knight has observed roll rates increasing on loans shifting from 60 to 90 days delinquent and from 90 days to foreclosure over the last four months. It should be noted, however, that nearly 75 percent of 90-day defaults and almost 80 percent of foreclosure starts are from loans originated in 2008 and earlier.
| As was reported in Black Knight's most recent First Look release, other key results include: |
|
| Total U.S. loan delinquency rate: |
5.64 % |
| Month-over-month change in delinquency rate: |
-1.13% |
| Total U.S. foreclosure pre-sale inventory rate: |
1.85% |
| Month-over-month change in foreclosure pre-sale inventory rate: |
-1.65% |
| States with highest percentage of non-current* loans: |
MS, NJ, FL, LA, NY |
| States with the lowest percentage of non-current* loans: |
AK, MT, CO, SD, ND |
| States with highest percentage of seriously delinquent* loans: |
MS, AL, RI, MA, LA |
*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 Financial Services' loan-level database of mortgage assets.
About the Mortgage Monitor
The Data and Analytics division of Black Knight Financial Services manages the nation's leading repository of loan-level residential mortgage data and performance information on approximately two-thirds of the overall market, including tens of millions of loans across the spectrum of credit products and more than 140 million historical records. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: http://www.bkfs.com/CorporateInformation/NewsRoom/Pages/Mortgage-Monitor.aspx
About Black Knight Financial Services, LLC
Black Knight Financial Services, a Fidelity National Financial (NYSE:FNF) company, is the mortgage and finance industries' leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle.
Black Knight Financial Services is committed to being the premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. For more information on Black Knight Financial Services, please visit www.bkfs.com.
SOURCE Black Knight Financial Services
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