Foreclosure Inventory Significantly Higher in Judicial States; Short Sale Percentages, Discounts Decreasing
– Judicial states account for 42 percent of active mortgages, yet more than 70 percent of foreclosure inventory
– Foreclosure inventory in judicial states is 3.5 times that of non-judicial
– HAMP modifications performing better than proprietary counterparts
– Short sales decline to just under 34 percent of all distressed transactions
JACKSONVILLE, Fla. -- Aug. 4, 2014 -- Today, the Data & Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, looking at data as of the end of June 2014. An analysis of the month’s mortgage performance data showed that the nation’s inventory of loans in foreclosure is disproportionately distributed in states with judicial foreclosure processes. According to Kostya Gradushy, Black Knight’s manager of Research and Analytics, while foreclosure inventories have been declining nationwide, judicial states’ foreclosure inventories are 3.5 times that of their non-judicial counterparts.
“Nationally, the foreclosure inventory rate has declined for 26 straight months, and is currently at its lowest point since April 2008, but this can obscure the stark difference that remains between judicial and non-judicial states,” said Gradushy. “Although judicial states account for about 42 percent of all active mortgages, some 70 percent of loans in foreclosure are in these states. Today, the share of loans in foreclosure in judicial states is 3.23 percent – a significant decline from its January 2012 high of 6.6 percent, but still more than four times higher than the pre-crisis ‘norm.’ Further, more than 60 percent of the foreclosure inventory in judicial states has been past due for two years or more. In fact, these loans have been delinquent an average of 1,084 days, as compared to just 775 days in non-judicial states. The states with the highest number of average days past due for loans in foreclosure are all judicial states: New York and Hawaii are each above 1,300 days, while New Jersey and Florida both top 1,200 days.
“We also looked at loan modifications and found that overall activity is down, with an average of just 45,000 modifications monthly so far this year. However, the share of Home Affordable Modification Program (HAMP) modifications has increased over the last five months. In May, HAMP accounted for over 60 percent of modifications, and for approximately 50 percent of all modifications so far this year. The data also showed that all vintages of HAMP modifications are performing significantly better in terms of re-default rates than proprietary modifications (those negotiated by the lender outside of HAMP) overall, as well as for modifications with reduced payments for the borrower. In most cases, proprietary modifications were almost twice as likely to re-default six months after modification than HAMP-modified loans.”
Finally, Black Knight found home sales volume rebounding as expected due to seasonal effects. Distressed sales (REO or short sale) continue to decline overall, while short sales in particular are making up an ever-smaller share of that diminishing volume and selling for less of a discount than traditional sales. After accounting for nearly 60 percent of all distressed sales at the end of 2012, short sales now make up fewer than 34 percent of non-traditional transactions. While short sale discounts are shrinking, those on REO properties remain stable at around 25 percent.
As was reported in Black Knight’s most recent First Look release, other key results include:
Total U.S. loan delinquency rate:
Month-over-month change in delinquency rate:
Total U.S. foreclosure pre-sale inventory rate:
Month-over-month change in foreclosure pre-sale inventory rate:
States with highest percentage of non-current* loans:
MS, NJ, FL, NY, LA
States with the lowest percentage of non-current* loans:
MN, MT, CO, SD, ND
States with highest percentage of seriously delinquent* loans:
MS, AL, RI, NV, MA
*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 over 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.
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 life cycle.
Black Knight Financial Services is committed to being the premier business partner that lenders and servicers rely onto 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.