Black Knight's May Mortgage Data: Foreclosure Starts Rise for First Time in Eight Months; Prepayment Activity Up for Third Consecutive Month
- Foreclosure starts rose by 9.5 percent in May, the first such increase in eight months
- Overall, year-to-date foreclosure starts lowest since 2007; down 32 percent from year ago
- Seasonal purchase activity picking up; purchase originations on par with 2013
- Negative equity down to 8.9 percent of total active mortgages; nearly 80 percent of seriously delinquent and foreclosure inventory underwater
JACKSONVILLE, Fla., July 3, 2014 /PRNewswire/ -- Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, looking at data as of the end of May 2014. An analysis of the month's mortgage performance data showed that -- in a reversal of an eight-month trend -- foreclosure starts increased by 9.5 percent in May. However, as Kostya Gradushy, Black Knight's manager of Loan Data and Customer Analytics points out, this increase must be seen in the proper context.
"While foreclosure starts did rise over 9 percent in May, it's important to remember the historical trend is still one of improvement," said Gradushy. "On a year-over-year basis, January through May foreclosure starts were still down 32 percent, and we are still looking at the lowest level of foreclosure starts in seven years. Additionally, over half of these starts are repeat foreclosures, rather than new entries into the pipeline. That is, these are loans that had been in foreclosure, shifted back to either current or delinquent status by way of modification, repayment plan or some action by the borrower, but have now fallen into foreclosure once again. Almost 80 percent of May's foreclosure starts were from 2008 or earlier vintage loans. Only one state -- New Jersey -- saw foreclosure starts increase as compared to the same period last year.
"Given that mortgage interest rates were at their lowest point in seven months, Black Knight also saw monthly prepayment speeds -- historically a good indicator of refinance activity -- rise again for the third consecutive month. Looking at this situation at a more granular level, we found that although prepayment rates actually declined on 2008 vintage loans, that year's mortgages still represent the highest total rate of prepayments. For 2009 through 2013 vintages, prepayments were up across the board over the past few months."
Though refinance activity is still down significantly from the levels seen in 2012 and early last year, it has increased 21 percent since January 2014. Black Knight also found that seasonal purchase activity has picked up, with approximately 897,000 purchase originations through April, a level on par with 2013 (898,000 over the same period), and better than 2012 (847,000). Overall, credit standards do not seem to be easing, as both average loan-to-value (LTV) ratios and credit scores on both purchase and refinance originations remain relatively strict and essentially unchanged.
Finally, home price appreciation continues to help drive down the share of borrowers underwater on their mortgages. As of April, the share of loans in negative equity positions had declined to 8.9 percent. However, the situation is significantly worse for loans either seriously delinquent (90 or more days past due) or in foreclosure. Black Knight found that 78 percent of this subset of distressed loans had combined loan-to-value ratios of 100 percent or more.
| As was reported in Black Knight's most recent First Look release, other key results include: |
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| Total U.S. loan delinquency rate: |
5.62% |
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| Month-over-month change in delinquency rate: |
-0.01% |
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| Total U.S. foreclosure pre-sale inventory rate: |
1.91% |
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| Month-over-month change in foreclosure pre-sale inventory rate: |
-5.56% |
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| States with highest percentage of non-current* loans: |
MS, NJ, FL, NY, LA |
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| States with the lowest percentage of non-current* loans: |
AK, MT, CO, SD, ND |
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| States with highest percentage of seriously delinquent* loans: |
MS, NV, AL, RI, MA |
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| *Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state. |
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| *Seriously delinquent loans are those past-due 90 days or more. |
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| Totals are extrapolated based on Black Knight Financial Services' loan-level database of mortgage assets. |
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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 nearly 40 million loans across the spectrum of credit products. 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/LPSCorporateInformation/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. Comprised of technology offerings from the union of LPS and ServiceLink, Black Knight Financial Services offers leading software systems; data and analytics offerings; and information solutions that facilitate and automate many of the business processes across the mortgage life cycle.
Black Knight Financial Services helps clients in the mortgage industry and beyond 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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