MORTGAGE MONITOR..., 2020, 30-year mortgage interest rates dropped to 3.6% according to the Freddie...

DECEMBER 2019 REPORT

MORTGAGE MONITOR

https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018

https://www.blackknightinc.com/

Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2020 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.

MORTGAGE MONITOR

DECEMBER 2019 | 2Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2020 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.

Each month, the Black Knight Mortgage Monitor looks at a variety of issues related to the mortgage finance and housing industries.

This month, as always, we begin with a review of some of the high-level mortgage performance statistics reported in our most recent First Look report, with an update on delinquency, foreclosure and prepayment trends. Next, we take a look back at 2019 from the perspective of mortgage performance and explore what recent trends in delinquency and foreclosure improvement may mean for the coming year.

On January 23rd, 2020, 30-year mortgage interest rates dropped to 3.6% according to the Freddie Mac Primary Mortgage Market Survey®. In light of this development, we next provide an update on the size and makeup of the population of refinance candidates in the market. Finally, leveraging the latest data from the Black Knight Home Price Index (HPI), we take a look at recent home price trends, including how interest rate declines have shifted growth rates across the country. In addition, we explore what current affordability metrics are telling us about the housing market.

In producing the Mortgage Monitor, Black Knight’s Data & Analytics division aggregates, analyzes and reports upon the most recently available data from the company’s vast mortgage and housing related data assets. Information is gathered from the McDash loan-level mortgage performance dataset, the Black Knight HPI and the company’s robust public property records database covering 99.9% of the U.S. population. For more information on gaining access to Black Knight’s data assets, please call 844-474-2537 or email [email protected].

DECEMBER 2019 OVERVIEW

MORTGAGE MONITOR

DECEMBER FIRST LOOK RELEASE

2019 YEAR IN REVIEW

REFINANCE LANDSCAPE

HOME PRICES & AFFORDABILITY

APPENDIX

DISCLOSURES

DEFINITIONS

3

4

10

12

17

20

21

CONTENTS




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MORTGAGE MONITOR

DECEMBER 2019 | 3

Here we have an overview of findings from Black Knight’s ‘First Look’ at December 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.

DECEMBER 2019 FIRST LOOK RELEASE

There are now 2.05M loans in some stage of delinquency, including active foreclosures down 236K from the same time last year and the lowest year-end volume since the turn of the century.

DECEMBER OVERVIEW STATS

CHANGE IN DELINQUENCY RATE

December saw a more than 12% year-over-year decline in the

national delinquency rate

At 3.4%, 2019 ended with the delinquency rate within 0.04% of

the record low set back in May

FORECLOSURE RATE

December marked a new 14-year low and the lowest foreclosure rate on record

outside the final five months of 2005

At 0.46%, the national foreclosure rate is down almost 12% year-over-year

PREPAYMENT RATE

Prepayment activity ticked up slightly after a 19% drop in November

Even with the flattening effect levelling interest rates have had on refi activity, prepayments are still up 126% from

this time last year

1.43%1.57%-3.75%



https://www.blackknightinc.com/black-knights-first-look-at-december-2019-mortgage-data/


https://www.blackknightinc.com/wp-content/uploads/2020/01/BKI_MM_Dec2019_Chart01.pdf




MORTGAGE MONITOR

DECEMBER 2019 | 4

Here, we take a look back at mortgage performance highlights from 2019 as well as key performance vectors entering 2020. 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.

DECEMBER 2019 YEAR IN REVIEW

» The national delinquency rate closed out 2019 at 3.4%, the lowest year-end rate of the century and down 12.4% from last year

» That's also more than 1.5% below the pre-recession average - the largest such spread in the years since the financial crisis

» When the rate of improvement slowed in mid-2019, it appeared the market was approaching a trough in mortgage delinquencies

» However, the rate of improvement picked back up again late in the year, suggesting delinquency rates could fall even further, potentially surpassing the record low hit in May 2019 by early 2020

© 2018 - Black Knight Inc.: Unauthorized use is strictly prohibited. Based on data believed to be reliable, not guaranteed as to accuracy or completeness. Page 1 of 1

3.40%

4.93%

0%

2%

4%

6%

8%

10%

12%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

DELINQUENCY RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)

Delinquency Rate 2000-2005 Average

DELINQUENCY RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

2001

-12

2002

-12

2003

-12

2004

-12

2005

-12

2006

-12

2007

-12

2008

-12

2009

-12

2010

-12

2011

-12

2012

-12

2013

-12

2014

-12

2015

-12

2016

-12

2017

-12

2018

-12

2019

-12

YEAR-OVER-YEAR CHANGE – NATIONAL DELINQUENCY RATEUnadjusted Adjusted (Excludes 2017 Hurricane Areas) Adjusted 6-Month Average

YEAR-OVER-YEAR CHANGE – NATIONAL DELINQUENCY RATE







MORTGAGE MONITOR

DECEMBER 2019 | 5


» The serious delinquency rate also continues to improve, falling to 0.81% in December

» That's down more than 18% year-over-year, and within 0.04% of the all-time low set in mid-2000

» As with the national delinquency rate, the rate of improvement among serious delinquencies began to pick-up again late in 2019

» In fact, December’s 18% year-over-year decline in serious delinquencies was the strongest such improvement in the past six months

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

2001

-12

2002

-12

2003

-12

2004

-12

2005

-12

2006

-12

2007

-12

2008

-12

2009

-12

2010

-12

2011

-12

2012

-12

2013

-12

2014

-12

2015

-12

2016

-12

2017

-12

2018

-12

2019

-12

YEAR-OVER-YEAR CHANGE – 90+ DAY DELINQUENCY RATEUnadjusted Adjusted (Excludes 2017 Hurricane Areas) Adjusted 6-Month Average

YEAR-OVER-YEAR CHANGE – 90+ NATIONAL DELINQUENCY RATE

© 2018 - Black Knight Inc.: Unauthorized use is strictly prohibited. Based on data believed to be reliable, not guaranteed as to accuracy or completeness. Page 1 of 1

0.81%1.07%

0%

1%

2%

3%

4%

5%

6%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

90+ DAY DELINQUENCY RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)

90+ Day Delinquency Rate 2000-2005 Average

90+ DAY DELINQUENCY RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)






MORTGAGE MONITOR

DECEMBER 2019 | 6

» As shown above, a clear geographical delineation persists with regard to serious delinquency rates

» Still, year-over-year declines were seen almost universally across the country

» Serious delinquency rates fell in 48 states in 2019, with 18 declining by 0.2 percentage points or more

» Only Minnesota and South Dakota, both heavily impacted by early-2019 flooding, saw serious delinquency rates increase – and in both cases, the rises were very modest

» The strongest declines were primarily in the east and southern portions of the country and in areas heavily impacted by the 2017 and 2018 hurricane seasons

» Colorado ended 2019 with the lowest serious delinquency rate of any state at 0.3%, more than 60% below the national average

» On the other end of the spectrum, Mississippi continues to lead the country, with nearly 3% of borrowers 90 days or more past due, but not yet in foreclosure

1-YEAR CHANGE IN SERIOUS DELINQUENCY RATE

-0.08%

-0.28%

-0.20%

-0.21%

-0.13%

-0.17%

-0.24%

-0.22%

-0.26%

-0.20%

-0.13%

-0.26%

-0.18%

-0.42%

-0.31%

-0.18% -0.23%

-0.10%

-0.29%

-0.11%

-0.11% -0.22%

-0.56%

-0.10%

-0.12%

-0.35%

-0.13%

-0.14%

-0.12%

-0.18%

-0.13%

-0.15%

-0.06%

-0.07%

-0.09%

-0.04%-0.14%

-0.14%

-0.13%

-0.06% -0.09%

-0.07%

0.01%

0.03%

SERIOUS DELINQUENCY RATE BY STATE – DEC. 2018BLUE = ABOVE AVERAGE | DARK BLUE = 2X AVERAGE

2.98%

1.80%

1.72%

1.63%

1.21%

1.20%

1.16%

1.15%

1.14%

1.11%

1.08%

1.08%

1.01%

1.00%

1.00%

0.99% 0.96%

0.95%

0.88%

0.87%

0.85% 0.84%

0.81%

0.78%

0.77%

0.76%

0.76%

0.76%

0.72%

0.70%

0.66%

0.65%

0.64%

0.57%

0.51%

0.49%

0.48%

0.40%0.39%

0.36%

0.36%

0.35% 0.32%

0.30%

SERIOUS DELINQUENCY RATE BY STATE – DECEMBER 2018BLUE = ABOVE AVERAGE | DARK BLUE = 2X AVERAGE

1-YEAR CHANGE IN SERIOUS DELINQUENCY RATE







MORTGAGE MONITOR

DECEMBER 2019 | 7

» Following the record low set in 2018, foreclosure starts fell another 16% in 2019, with just 482K loans referred to foreclosure in the calendar year

» In fact, 2019 accounted for nine of the 10 lowest monthly totals of the century, including the lowest single-month foreclosure start volume on record in November

» Defaults (borrowers becoming newly 90 days past due) fell 3% year over year, with 2019's total of just over 1M defaults just slightly above the all-time low set in 2000

» Foreclosure sales also set a new record low, with 145K foreclosure sales reported for 2019, down 18% from the year prior

» The rate of decline among foreclosure sales also remains strong, falling on average by more than 15% year-over-year in Q4 2019

0

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%

0.08%

0.09%

0.1%

0

200000

400000

600000

800000

1000000

1200000

1400000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

FORECLOSURE SALE ACTIVITYForeclosure Sales As Percent of Active Foreclosure Inventory (Monthly Average)

0

200000

400000

600000

800000

1000000

1200000

1400000

2000-Q

4

2001-Q

2

2001-Q

4

2002-Q

2

2002-Q

4

2003-Q

2

2003-Q

4

2004-Q

2

2004-Q

4

2005-Q

2

2005-Q

4

2006-Q

2

2006-Q

4

2007-Q

2

2007-Q

4

2008-Q

2

2008-Q

4

2009-Q

2

2009-Q

4

2010-Q

2

2010-Q

4

2011-Q

2

2011-Q

4

2012-Q

2

2012-Q

4

2013-Q

2

2013-Q

4

2014-Q

2

2014-Q

4

2015-Q

2

2015-Q

4

2016-Q

2

2016-Q

4

2017-Q

2

2017-Q

4

2018-Q

2

2018-Q

4

2019-Q

2

2019-Q

4

90-DAY DEFAULTS AND FORECLOSURE STARTSForeclosure Starts 90 Day Defaults

90-DAY DEFAULTS AND FORECLOSURE STARTS FORECLOSURE SALE ACTIVITY







MORTGAGE MONITOR

DECEMBER 2019 | 8

» Historically low levels of default activity and foreclosure starts continued to drive down the number of active foreclosures across the U.S.

» Active foreclosure inventory fell by 10% throughout 2019, from 271K in January to 245K by December month-end

» The national foreclosure rate now (0.46%) is both the lowest start to any year on record, and the lowest overall outside the final five months of 2005

» At the current rate of reduction, the national foreclosure rate would surpass its all-time low by mid-2020

0.46%0.62%

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

FORECLOSURE RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)

Foreclosure Rate 2000-2005 Average


FORECLOSURE RATE – FIRST LIEN MORTGAGES(YEAR-END METRICS)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

ACTIVE FORECLOSURE INVENTORY(YEAR-END VOLUMES)

Active Foreclosure Inventory At Current Rate of Reduction 2000-2005 Average Record Low (June 2000)

Example Scenario based on current rate

of reduction

ACTIVE FORECLOSURE INVENTORY(YEAR-END METRICS)






MORTGAGE MONITOR

DECEMBER 2019 | 9

» Early-stage foreclosures (past-due for less than one year) are less than half of their historical average, with just 113K in the market today

» 70K active foreclosures exist in which the borrower hasn’t made a payment in more than two years, some 47K more than typically seen in the market

» There are 36K cases where the borrower hasn’t made a payment in five or more years

» Such excess aged foreclosures (5+ years past due) make up nearly 15% of all active foreclosure cases more than a decade after the start of the financial crisis

» Nearly half (46%) of the 36K are in New York, followed by Florida with 5,900 such cases (16% market share); Nevada is third with just 4%

Florida16%

5,900

All Other38%

13,500

New York46%

16,600

BREAKDOWN OF AGED (>5 YEAR DQ) FORECLOSURESBREAKDOWN OF AGED (>5 YEAR DQ) FORECLOSURES


239K

69K

15K4K 2K 1K

113K

62K

20K9K 5K

36K

< 1 Year 1 Year 2 Years 3 Years 4 Years 5+ Years

FORECLOSURE INVENTORY – BY YEARS DELINQUENTHistorical Average* Current Distribution

2000-2005 average applied to total outstanding mortgage universe as of December 2019.

FORECLOSURE INVENTORY – BY YEARS DELINQUENT

2000-2005 average applied to total outstanding mortgage universe as of December 2019.






MORTGAGE MONITOR

DECEMBER 2019 | 10

Here, we dissect how recent interest rate declines have impacted refinance incentive, and provide an update on the size and makeup of the population of refinance candidates in the market today. 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.

DECEMBER 2019 REFINANCE LANDSCAPE

» Interest rates have remained relatively steady after briefly bottoming out near 3.5% in September 2019

» In fact, rates have remained within an 1/8th of a point band (3.625% to 3.75%) for the final eight weeks of 2019 and first three weeks of 2020

» On January 23rd, rates slipped to 3.6%, giving an additional 1.4M homeowners incentive to refinance, an 18% increase in a single week

» Continued reaction in both the stock and bond markets to the global threat of the coronavirus may put additional downward pressure on interest rates

» There are now 9.4M 30-year-mortgage holders in good standing who have at least 20% equity in their homes, credit scores of 720 or higher and who could cut their current interest rate by at least 0.75% by refinancing

» This is the largest the population has been since mid-October 2019, when interest rates briefly fell below 3.6%

» On average, these borrowers could save $264 per month, for an aggregate monthly savings of nearly $2.5 billion

» While down slightly from the $2.6B aggregate potential savings in August and September of 2019, it is three times the volume of savings available at the beginning of last year

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

$B

$1B

$1B

$2B

$2B

$3B

$3B

2001

-01

2002

-01

2003

-01

2004

-01

2005

-01

2006

-01

2007

-01

2008

-01

2009

-01

2010

-01

2011

-01

2012

-01

2013

-01

2014

-01

2015

-01

2016

-01

2017

-01

2018

-01

2019

-01

2020

-01

AGGREGATE MONTHLY SAVINGS AVAILABLE THROUGH REFI Est Monthly Savings Available (Left Axis) Freddie 30-Year Fixed Rate (Right Axis)

.0M

2.0M

4.0M

6.0M

8.0M

10.0M

12.0M

14.0M

3.00%

3.20%

3.40%

3.60%

3.80%

4.00%

4.20%

4.40%

4.60%

4.80%

5.00%

06.Dec 10.Jan 14.Feb 21.Mar 25.Apr 30.May 03.Jul 08.Aug 12.Sep 17.Oct 21.Nov 26.Dec 30.Jan

REFINANCE CANDIDATES BY WEEK VS. 30-YEAR FIXED RATESRefi Candidates (Right Axis) 30-Year Fixed Rate Freddie PMMS (Left Axis)

AGGREGATE MONTHLY SAVINGS AVAILABLE THROUGH REFIREFINANCE CANDIDATES BY WEEK VS. 30-YEAR FIXED RATES







MORTGAGE MONITOR

DECEMBER 2019 | 11

» Recent weeks have shown again just how sensitive to even slight rate changes the refinance market remains

» Given the distribution of interest rates on active mortgages, as little as an 1/8th of a point decline in rates would add an additional 1.8M refi candidates

» Likewise, rates edging slightly upward would remove incentive from 1.6M current refinance candidates

» Minor shifts in interest rates could also impact prepayment speeds and the effectiveness of lender/servicer retention strategies

» 2018-vintage borrowers still make up the largest volume of refinance candidates, and increased by 218K on the most recent rate drop, the largest growth among any group

» Other vintages saw significant increases as well; 216K 2017 vintage borrowers regained incentive to refinance, with >100K increases in the 2010, 2011, 2014, 2015 and 2019 vintages

» As recent rate declines may make these vintages more reactive in terms of prepayment/refinance activity, it would benefit servicers/lenders to shift origination and retention strategies accordingly

DECEMBER 2019 REFINANCE LANDSCAPE

835K

336K 38

7K

279K

267K

196K

678K 74

6K

632K

310K

461K

666K

352K

259K

691K

1,52

1K

749K

<200

4

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

DISTRIBUTION OF REFINANCE CANDIDATES BY VINTAGE3.75% 30-Year Rate 3.625% 30-Year Rate

19.4

M

17.2

M

14.6

M

12.9

M

11.2

M

9.4M

7.8M

6.5M

5.5M

4.5M

3.5M

3.1M

2.7M

2.3M

2.0M

1.7M

1.6M

1.4M

1.1M

1.0M

.9M

3.00

0%

3.12

5%

3.25

0%

3.37

5%

3.50

0%

3.62

5%

3.75

0%

3.87

5%

4.00

0%

4.12

5%

4.25

0%

4.37

5%

4.50

0%

4.62

5%

4.75

0%

4.87

5%

5.00

0%

5.12

5%

5.25

0%

5.37

5%

5.50

0%

NUMBER OF REFINANCE CANDIDATES UNDER DIFFERENT 30-YEAR FIXED RATE SCENARIOS

(BASED ON FIRST LIEN MARKET MAKE UP AS OF DECEMBER 2019)

NUMBER OF REFINANCE CANDIDATES UNDER DIFFERENT 30-YEAR FIXED RATE SCENARIOS

(BASED ON FIRST LIEN MARKET MAKE UP AS OF DECEMBER 2019)

DISTRIBUTION OF REFINANCE CANDIDATES BY VINTAGE






MORTGAGE MONITOR

DECEMBER 2019 | 12

Here, we take a look at recent home price trends, including how interest rate declines have shifted growth rates across the country. In addition, we explore what current affordability metrics are telling us about the housing market. This information has been compiled from Black Knight’s Home Price Index, as well as the company’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

DECEMBER 2019 HOME PRICES & AFFORDABILITY

» After falling from nearly 7% year-over-year appreciation in early 2018 to a trough of 3.8% in August 2019, the national home price growth rate gained a good deal of steam as mortgage interest rates declined throughout the second half of last year

» In fact, December marked four consecutive months of home price growth acceleration and the largest single-month acceleration (0.4%) in more than 6.5 years

» The annual rate of appreciation saw nearly a full percentage point increase over the last four months of 2019, closing out the year at 4.7%

-0.60%

-0.40%

-0.20%

0.00%

+0.20%

+0.40%

+0.60%

+0.80%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2012

-12

2013

-03

2013

-06

2013

-09

2013

-12

2014

-03

2014

-06

2014

-09

2014

-12

2015

-03

2015

-06

2015

-09

2015

-12

2016

-03

2016

-06

2016

-09

2016

-12

2017

-03

2017

-06

2017

-09

2017

-12

2018

-03

2018

-06

2018

-09

2018

-12

2019

-03

2019

-06

2019

-09

2019

-12

1-M

onth

Cha

nge

in A

nnua

l Hom

e Pr

ice

Gro

wth

Rat

e

30-Y

ear F

ixed

Inte

rest

Rat

e

BLACK KNIGHT HOME PRICE INDEX1-Month Change in Annual Home Price Growth Rate 30-Year Fixed Interest Rate

SLO

WIN

G|

HEA

TING

Source: Black Knight Home Price Index

+4.73%

-0.50%

0.00%

+0.50%

+1.00%

+1.50%

+2.00%

+2.50%

+3.00%

-1.5%

+0.5%

+2.5%

+4.5%

+6.5%

+8.5%

2012

-12

2013

-03

2013

-06

2013

-09

2013

-12

2014

-03

2014

-06

2014

-09

2014

-12

2015

-03

2015

-06

2015

-09

2015

-12

2016

-03

2016

-06

2016

-09

2016

-12

2017

-03

2017

-06

2017

-09

2017

-12

2018

-03

2018

-06

2018

-09

2018

-12

2019

-03

2019

-06

2019

-09

2019

-12

1-M

onth

Percent

Cha

nge

in A

vera

ge H

ome

Pric

e

Ann

ual H

ome

Pric

e G

row

th R

ate

BLACK KNIGHT HOME PRICE INDEX1-Month Home Price Change Annual Home Price Growth Rate


BLACK KNIGHT HOME PRICE INDEX

Source: Black Knight Home Price Index Source: Black Knight Home Price Index

BLACK KNIGHT HOME PRICE INDEX







MORTGAGE MONITOR

DECEMBER 2019 | 13


» While home prices at the lower end of the market continue to appreciate at nearly three times the rate of the top 20% by price, higher-priced homes have been more reactive to recent rate declines

» The annual growth rate among the top 20% of homes by price across the country has more than tripled over the past four months, with very little acceleration at the lowest end of the market

» Some geographies have been more reactive as well

» In New York City, for example, the home price growth rate has jumped by more than 80% over the past four months

» Both San Francisco and San Jose have seen their growth rate jump by nearly four full percentage points over the past four months

» While home prices are still down slightly in San Jose from one year ago, the recent pullback in rates has begun to noticeably curb what had been sharply falling home prices in the area

» Seattle has gone from red-hot in early 2018 (+14.8%), to flat by mid-2019 (+0.7%) and closed out 2019 at +6.1% back above the national average

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2012

-12

2013

-03

2013

-06

2013

-09

2013

-12

2014

-03

2014

-06

2014

-09

2014

-12

2015

-03

2015

-06

2015

-09

2015

-12

2016

-03

2016

-06

2016

-09

2016

-12

2017

-03

2017

-06

2017

-09

2017

-12

2018

-03

2018

-06

2018

-09

2018

-12

2019

-03

2019

-06

2019

-09

2019

-12

ANNUAL RATE OF HOME PRICE APPRECIATION BY CBSANational San Jose, CA Seattle, WA San Francisco, CA Los Angeles, CA New York/New Jersey, NY/NJ


3.8%

6.5%

4.9%

3.8%

2.5%

0.7%

4.7%

6.6%

5.7%

4.8%

3.8%

2.3%

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

Overall Tier 1 (Bottom 20%) Tier 2 Tier 3 Tier 4 Tier 5 (Top 20%)

ANNUAL HOME PRICE GROWTH RATE BY PRICE TIER(BLACK KNIGHT HOME PRICE INDEX)

Aug-19 Dec-19


ANNUAL HOME PRICE GROWTH RATE BY PRICE TIER(BLACK KNIGHT HOME PRICE INDEX)

ANNUAL RATE OF HOME PRICE APPRECIATION BY CBSA

Source: Black Knight Home Price IndexSource: Black Knight Home Price Index






MORTGAGE MONITOR

DECEMBER 2019 | 14

» While home price growth slowed for most of 2019, recent upticks put full-year growth at 4.7%, just slightly below that of 2018

» The housing market is heating entering 2020 and recent rate declines could continue that trend, a sharp contrast to the strong cooling that was seen at this same time last year

» Despite some of the volatility seen along the west coast, we’re also seeing much more uniform growth rates across the country

» The highest growth rate of any top market for 2019 was in Salt Lake City, UT at +8.1%, the lowest maximum growth rate of any year since 2011

» In fact, more than 60% of markets saw home price growth in a relatively narrow window, between 3% and 6%

» With the market condensing from both ends, 2020 could be a year of more uniform home price growth across the country


2.8% 2.7%3.5%

6.0%7.1%

8.6%

6.5%

8.5% 8.7%

12.5%11.4%

1.5%

-4.6%

-10.0%

-4.1% -4.8%-3.1%

5.2%

8.0%

4.4%5.2% 5.5%

6.4%4.8% 4.7%

-15%

-10%

-5%

0%

5%

10%

15%

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

ANNUAL HOME PRICE APPRECIATION BY YEAR


Rank Geography (CBSA) Annual Rate of Home Price Growth

1 Salt Lake City, UT +8.1%

2 Phoenix, AZ +7.8%

3 Buffalo, NY +7.6%

4 Columbus, OH +7.4%

5 Charlotte, NC +7.1%

6 Providence, RI +6.9%

7 Cincinnati, OH +6.6%

8 Orlando, FL +6.6%

9 Memphis, TN +6.5%

10 Indianapolis, IN +6.2%

TOP 10 WITH HIGHEST HOME PRICE GROWTH

Rank Geography (CBSA) Annual Rate of Home Price Growth

41 Miami, FL +3.4%

42 Dallas, TX +3.1%

43 Detroit, MI +3.0%

44 Hartford, CT +3.0%

45 Baltimore, MD +2.6%

46 Las Vegas, NV +2.5%

47 Houston, TX +2.4%

48 Chicago, IL +2.4%

49 San Francisco, CA +2.2%

50 San Jose, CA -0.8%

10 MARKETS WITH LOWEST HOME PRICE GROWTH

Source: Black Knight Home Price Index Analysis of 50 Largest U.S. Markets

ANNUAL HOME PRICE APPRECIATION BY YEAR


Source: Black Knight Home Price Index Analysis of 50 Largest U.S. Markets







MORTGAGE MONITOR

DECEMBER 2019 | 15


» Even with home price growth accelerating, today’s low-interest-rate environment has made home affordability the best it’s been since early 2018

» At that time, the housing market was red-hot, with national home price growth at 6.6% and climbing – before rising rates and tightening affordability triggered a pullback in growth rates

» It now requires 20.6% of median monthly income to purchase the same home as it did just over a year ago, the smallest payment-to-income ratio we’ve seen in two years

» Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power

» Recent history at comparable levels of affordability suggest acceleration in home price growth may well continue in the coming months as this increased buying power puts upward pressure on home prices across the country

34.5%

20.6%

3.60%

2.5%

4.0%

5.5%

7.0%

8.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1996-0

1

1997-0

1

1998-0

1

1999-0

1

2000-0

1

2001-0

1

2002-0

1

2003-0

1

2004-0

1

2005-0

1

2006-0

1

2007-0

1

2008-0

1

2009-0

1

2010-0

1

2011-0

1

2012-0

1

2013-0

1

2014-0

1

2015-0

1

2016-0

1

2017-0

1

2018-0

1

2019-0

1

2020-0

1

Fred

die

30-Y

ear F

ixed

Rat

e

Paym

ent-

to-In

com

e R

atio

NATIONAL PAYMENT-TO-INCOME RATIO*Payment-to-Income Ratio (Left Axis) Freddie 30-Year Fixed Interest Rate (Right Axis)

*The National Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest payment on the purchase of the median priced home using a 20% down 30-year fixed rate mortgage at the prevailing interest rate

Despite the average home price increasing by nearly $13K from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates

NATIONAL PAYMENT-TO-INCOME RATIO*

*The National Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest payment on the purchase of the median priced home using a 20% down 30-year fixed rate mortgage at the prevailing interest rate





MORTGAGE MONITOR

DECEMBER 2019 | 16

» In late 2018, rising rates made purchasing a home less affordable than long-term averages in nine states and Washington D.C.; with rates at 3.6%, only California and Hawaii remain less affordable than long-term averages

» While affordability in California has improved, it still requires over 2% more of the average income to make the monthly mortgage payments on the average priced home purchase than it did from 1995 to 2003

» In San Jose, falling rates (and home prices) have reduced the share of median income needed to make payments on the average home purchase from 48% in mid-2018 to 38% as of January 2019

» Yet, along with Los Angeles (43% payment-to-income ratio), San Jose remains one of the two least affordable markets in the country

» On the other end of the spectrum, affordability abounds in the Midwest; in areas like Cleveland, OH; Detroit, MI; Kansas City, MO and St. Louis, less than 15% of the median income is needed to purchase the average-priced home

» In Illinois, it currently requires 10% less of median gross income to purchase the average priced home than it did on average from 1995-2003

» It takes at least 5% less to buy the average-priced home today than 1995-2003 in 31 states, likely a contributing factor to the reheating of the housing market


PAYMENT-TO-INCOME RATIO BY CBSAGREEN = MORE AFFORDABLE THAN NATIONAL AVERAGE

BLUE = LESS AFFORDABLE THAN NATIONAL AVERAGE

*Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest payment on the purchase of the median priced home using a 20% down 30-year fixed rate mortgage at the prevailing interest rate

PAYMENT-TO-INCOME RATIO BY CBSAGREEN = MORE AFFORDABLE THAN NATIONAL AVERAGE | BLUE = LESS AFFORDABLE THAN NATIONAL AVERAGE

*Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest payment on the purchace of the median priced home using a 20% down 30-year fixed rate mortgage at the prevailing interest rate

Rank Geography (CBSA) Payment To Income Ratio

1 Cleveland, OH 12.8%

2 Hartford, CT 13.5%

3 Cincinnati, OH 14.0%

4 Detroit, MI 14.1%

5 Kansas City, MO 14.7%

6 St. Louis, MO 14.9%

7 Oklahoma City, OK 15.0%

8 Indianapolis, IN 15.5%

9 Columbus, OH 15.7%

10 Pittsburgh, PA 15.8%

TOP 10 MOST AFFORDABLE MARKETS

Rank Geography (CBSA) Payment To Income Ratio

41 Boston, MA 25.1%

42 Miami, FL 25.4%

43 Riverside, CA 25.4%

44 Sacramento, CA 26.1%

45 Seattle, WA 26.3%

46 New York-Newark, NY-NJ 28.1%

47 San Diego, CA 35.1%

48 San Francisco, CA 36.6%

49 San Jose, CA 38.1%

50 Los Angeles, CA 43.4%

10 LEAST AFFORDABLE MARKETS







MORTGAGE MONITOR

DECEMBER 2019 | 17

Dec-19 Monthly Change

YTD Change

Yearly Change

Delinquencies 3.40% -3.75% -9.30% -12.43%

Foreclosure 0.46% -1.57% -9.60% -11.59%

Foreclosure Starts 39,500 17.91% -21.31% -14.69%

Seriously Delinquent (90+) or in Foreclosure 1.27% -2.50% -14.43% -15.98%

New Originations (data as of Nov-19) 708K -13.5% 57.6% 47.4%

Dec-19 Nov-19 Oct-19 Sep-19 Aug-19 Jul-19 Jun-19 May-19 Apr-19 Mar-19 Feb-19 Jan-19 Dec-18

Delinquencies 3.40% 3.53% 3.39% 3.53% 3.45% 3.46% 3.73% 3.36% 3.47% 3.65% 3.89% 3.75% 3.88%

Foreclosure 0.46% 0.47% 0.48% 0.48% 0.48% 0.49% 0.50% 0.49% 0.50% 0.51% 0.51% 0.51% 0.52%

Foreclosure Starts 39,500 33,500 43,900 39,400 36,200 39,200 40,100 39,000 41,400 39,700 40,400 50,200 46,300

Seriously Delinquent (90+) or in Foreclosure 1.27% 1.30% 1.31% 1.32% 1.33% 1.34% 1.37% 1.37% 1.40% 1.45% 1.47% 1.48% 1.51%

New Originations 708K 819K 763K 757K 720K 658K 679K 598K 518K 417K 380K 450K

3.88

%

3.75

%

3.89

%

3.65

%

3.47

%

3.36

%

3.73

%

3.46

%

3.45

%

3.53

%

3.39

%

3.53

%

3.40

%

Dec-18

Jan-1

9

Feb-19

Mar-19

Apr-19

May-19

Jun-1

9Ju

l-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

TOTAL DELINQUENCIES

450K

380K

417K 51

8K 598K 67

9K

658K

720K

757K

763K

819K

708K

Dec-18

Jan-1

9

Feb-19

Mar-19

Apr-19

May-19

Jun-1

9Ju

l-19

Aug-19

Sep-19

Oct-19

Nov-19

NEW ORIGINATIONS

DECEMBER 2019 DATA SUMMARY

DECEMBER 2019 APPENDIX





MORTGAGE MONITOR

DECEMBER 2019 | 18

Month TOTAL ACTIVE COUNT 30 DAYS 60 DAYS 90+ DAYS FC Total NC FC Starts Average Days

Delinquent for 90+Average Days

Delinquent for FCRatio of 90+

to 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 50,754,010 1,300,564 444,962 832,265 660,056 3,237,847 72,021 494 1,047 126.1%1/31/17 51,159,681 1,110,977 390,341 665,258 481,613 2,648,190 70,568 454 1,012 138.1%1/31/18 51,428,922 1,085,065 413,313 708,248 337,351 2,543,976 62,470 364 931 209.9%1/31/19 51,896,438 1,074,044 367,750 503,655 264,875 2,210,325 50,196 391 830 190.1%2/28/19 51,952,453 1,154,445 362,974 501,897 264,225 2,283,541 40,353 385 838 190.0%3/31/19 52,081,244 1,061,924 348,443 492,889 264,451 2,167,707 39,657 391 853 186.4%4/30/19 52,228,211 1,003,514 335,160 473,565 259,290 2,071,529 41,356 393 880 182.6%5/31/19 52,304,596 965,815 332,992 461,036 255,386 2,015,229 38,970 394 897 180.5%6/30/19 52,288,778 1,145,626 349,170 454,890 259,274 2,208,960 40,126 364 920 175.4%7/31/19 52,260,606 1,020,037 343,343 443,500 257,859 2,064,739 39,189 369 908 172.0%8/31/19 52,519,269 1,025,863 343,145 444,029 252,873 2,065,911 36,179 364 913 175.6%9/30/19 52,574,229 1,058,103 352,565 442,868 252,215 2,105,751 39,433 348 892 175.6%10/31/19 52,657,467 1,007,146 345,630 432,863 255,268 2,040,907 43,933 351 871 169.6%11/30/19 52,876,213 1,077,255 351,357 439,386 247,856 2,115,854 33,519 339 872 177.3%12/31/19 53,013,933 1,027,702 347,636 427,204 244,590 2,047,131 39,505 335 855 174.7%

LOAN COUNTS AND AVERAGE DAYS DELINQUENT






MORTGAGE MONITOR

DECEMBER 2019 | 19

State Del % FC % NC % Year/Year Change in NC% State Del % FC % NC % Year/Year

Change in NC% State Del % FC % NC % Year/Year Change in NC%

National 3.4% 0.5% 3.9% -12.3% National 3.4% 0.5% 3.9% -12.3% National 3.4% 0.5% 3.9% -12.3%MS 9.3% 0.7% 10.0% -0.9% OH* 4.0% 0.7% 4.6% -9.2% NH 3.1% 0.2% 3.4% -11.2%LA* 6.7% 0.9% 7.6% -6.8% TN 4.2% 0.2% 4.4% -12.0% VA 3.1% 0.2% 3.3% -12.4%WV 6.0% 0.5% 6.5% -2.2% KS* 3.9% 0.4% 4.3% -9.6% NV 2.5% 0.5% 3.0% -15.4%AL 6.1% 0.4% 6.5% -6.1% IL* 3.6% 0.7% 4.3% -16.4% AK 2.7% 0.3% 3.0% -8.8%AR 5.6% 0.5% 6.1% -3.6% NM* 3.5% 0.7% 4.2% -11.1% WY 2.7% 0.2% 2.9% -12.6%IN* 5.0% 0.7% 5.6% -8.1% NJ* 3.5% 0.6% 4.2% -19.3% AZ 2.6% 0.2% 2.8% -8.0%OK* 4.7% 0.9% 5.6% -4.1% VT* 3.2% 1.0% 4.2% -14.4% SD* 2.4% 0.4% 2.8% -2.1%PA* 4.6% 0.7% 5.3% -7.7% NC 3.8% 0.3% 4.2% -15.6% MN 2.4% 0.2% 2.6% -0.6%RI 4.5% 0.7% 5.2% -12.1% FL* 3.3% 0.7% 4.1% -17.9% DC 2.0% 0.5% 2.4% -37.4%GA 4.7% 0.3% 5.0% -8.4% MO 3.7% 0.3% 4.0% -7.7% UT 2.2% 0.1% 2.3% -13.8%ME* 3.7% 1.3% 5.0% -16.8% KY* 3.5% 0.5% 4.0% -10.3% MT 2.0% 0.3% 2.3% -13.3%DE* 4.2% 0.7% 5.0% -11.4% IA* 3.3% 0.6% 3.9% -3.3% ND* 1.7% 0.4% 2.2% -11.4%SC* 4.4% 0.5% 4.9% -11.0% NE* 3.6% 0.3% 3.8% -2.7% CA 1.8% 0.2% 2.0% -21.9%TX 4.5% 0.3% 4.9% -5.5% MI 3.5% 0.2% 3.7% -10.1% ID 1.8% 0.2% 1.9% -17.8%CT* 4.0% 0.8% 4.9% -15.7% MA 3.2% 0.4% 3.7% -12.4% OR 1.6% 0.2% 1.8% -13.3%MD* 4.3% 0.6% 4.8% -12.5% HI* 2.3% 1.3% 3.6% -21.5% WA 1.6% 0.2% 1.8% -22.3%NY* 3.4% 1.4% 4.8% -17.8% WI* 3.1% 0.4% 3.5% -9.3% CO 1.6% 0.1% 1.7% -8.3%

* Indicates Judicial State

STATE-BY-STATE RANKINGS BY NON-CURRENT LOAN POPULATION






MORTGAGE MONITOR

DECEMBER 2019 | 20

Mortgage Monitor Disclosures

You can reach us by email [email protected]

Follow us on Twitter@Black_KnightInc

DECEMBER 2019 DISCLOSURE



http://www.blackknightinc.com/wp-content/uploads/2018/09/BKI_MM-Disclosures.pdf

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mailto:Mortgage.Monitor%40bkfs.com%20?subject=

https://twitter.com/black_knightinc?lang=en


MORTGAGE MONITOR

DECEMBER 2019 | 21

DECEMBER 2019 DEFINITIONS

TOTAL ACTIVE COUNT: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total active count.

DELINQUENCY STATUSES (30, 60, 90+, ETC):

All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquent.

90 DAY DEFAULTS: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month.

FORECLOSURE INVENTORY: The servicer has referred the loan to an attorney for foreclosure. Loans remain in foreclosure inventory from referral to sale.

FORECLOSURE STARTS: Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month.

NON-CURRENT: Loans in any stage of delinquency or foreclosure.

FORECLOSURE SALE / NEW REO:

Any loan that was in foreclosure in the prior month that moves into post-sale status or is flagged as a foreclosure liquidation.

REO: The loan is in post-sale foreclosure status. Listing status is not a consideration, this includes all properties on and off the market.

DETERIORATION RATIO: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving.



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