Monday, February 01, 2016

Black Knight December Mortgage Monitor

by Bill McBride on 2/01/2016 02:45:00 PM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for December today. According to BKFS, 4.78% of mortgages were delinquent in December, down from 4.92% in November. BKFS reported that 1.37% of mortgages were in the foreclosure process.

This gives a total of 6.15% delinquent or in foreclosure.

Press Release: Black Knight's December 2015 Mortgage Monitor: Home Affordability Still Better than Pre-Bubble Average; $64B in Equity Tapped Via Cash-Out Refis During Past 12 Months

Today, the Data & Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Mortgage Monitor Report, based on data as of the end of December 2015. ...
"We also returned to the subject of cash-out refinances. Nearly 300,000 were originated in Q3 2015 and roughly 1 million over the past 12 months, marking six consecutive quarters of rising cash-out refi volumes. In Q3 2015, 42 percent of all first lien refinances involved a cash-out component, the highest share since 2008. Likewise, the average cash-out amount – over $60,000 – is the highest since 2007. All totaled, there was $64 billion in equity tapped via cash-out refinances over the past 12 months, the highest dollar amount for any equivalent 12-month period since 2008-2009. Even so, this amounted to less than 2 percent of available equity being tapped. This is slightly below the post-crisis norm, and 80 percent less than the total amount of equity extracted from the market in 2005-2006. The resulting LTV and credit score risk of recent cash-out refinances remains low as well – average credit scores on cash-out refinances are 748, and the resulting post-cash-out average LTV of 67 percent is the lowest level on record."

Finally, Black Knight looked at the full year of foreclosure activity in review and found that overall foreclosure starts were down 12 percent from 2014. First-time foreclosure starts -- driven lower by the more pristine performance of recent vintages and reduced inflow of severely delinquent loans from crisis era vintages -- were down 19 percent from last year, marking their lowest volume in over a decade. In fact, there were 30 percent fewer first-time foreclosure starts in 2015 than in 2005 during the run up to the housing crisis. The 377,000 foreclosure sales (completions) over the course of the year represented a 17 percent decline from 2014, and a 70 percent drop from the peak of sale activity in 2010. All totaled, there have now been 7.1 million residential homes lost to foreclosure sale since the beginning of 2007. Active foreclosure inventory ended the year below 700,000 for the first time since 2006, less than a third of what it was at the height of the crisis.
emphasis added
BKFS Click on graph for larger image.

This graph from Black Knight shows foreclosure starts since 2005.

From Black Knight:
Foreclosure starts were down 12 percent in 2015; first time starts fell 19 percent, while repeat foreclosures – loans that had been referred to foreclosure at least once in the past – were only down 4 percent

Driven lower by pristine performance of recent vintages and reduced inflow of severely delinquent loans from crisis era vintages, first time foreclosure starts fell to their lowest level in over a decade

In fact, there were 30 percent fewer first time starts in 2015 than in 2005 during the run up to the housing crisis
BKFSFrom Black Knight:
Nearly 300,000 cashout refinances were originated in Q3 2015 – a 39 percent increase over 2014 – and approximately 1 million were originated over the past 12 months
This is still a small number of cash out refinances compared to the bubble years. There is much more in the mortgage monitor.