MORTGAGE MONITOR - Black Knight, Inc. · Information is gathered from the McDash loan-level...

JUNE 2019 REPORT

MORTGAGE MONITOR

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

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

MORTGAGE MONITOR

JUNE 2019 | 2Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2019 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. From there, we break down the June rise in delinquency rates while also taking a look at Q2 2019 default and foreclosure metrics.

After five consecutive months of increased prepayment activity, the metric reversed course in June. We therefore take an in-depth look at the decline in prepayment activity, while also providing an update on the number of refinance candidates in the market. Finally, in light of recent interest rate drops, we revisit the issue of home affordability. We also examine home price growth trends across the country after 15 consecutive months of declining annual home price appreciation.

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].

JUNE 2019 OVERVIEW

MORTGAGE MONITOR

JUNE FIRST LOOK RELEASE

Q2 2019 MORTGAGE PERFORMANCE UPDATE

PREPAYMENT ACTIVITY

HOME PRICES & AFFORDABILITY

APPENDIX

DISCLOSURES

DEFINITIONS

3

4

10

13

21

24

25

CONTENTS




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MORTGAGE MONITOR

JUNE 2019 | 3

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

JUNE 2019 FIRST LOOK RELEASE

After setting multiple consecutive record lows, the calendar conspired against the national delinquency rate as seasonal rises, combined with June ending on a Sunday, delivered a nearly 11% spike in delinquencies

JUNE OVERVIEW STATS

FORECLOSURE STARTS

Both foreclosure starts and the number of loans in active foreclosure rose

modestly in June

Still, starts were down nearly 8% from this time last year

2.8%

CHANGE IN DELINQUENCY RATE

Seasonal rises and calendar impacts drove delinquencies up from May’s

all-time low

June ended on a Sunday, a factor which historically – and usually temporarily –

increases mortgage delinquencies

10.8%

PREPAYMENT RATE

Despite increased refinance incentive from lower interest rates, prepayment

activity fell 7.5% from May

May’s dip marked the first decline in prepayments in five months

-7.5%



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http://www.blackknightinc.com/wp-content/uploads/2019/07/BKI_MM_Jun2019_Chart01.pdf




MORTGAGE MONITOR

JUNE 2019 | 4

Here, we break down the June rise in delinquency rates while also taking a look at Q2 2019 default and foreclosure metrics. 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.

JUNE 2019 MORTGAGE PERFORMANCE UPDATE

3.73%4.39%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

2000

-06

2001

-06

2002

-06

2003

-06

2004

-06

2005

-06

2006

-06

2007

-06

2008

-06

2009

-06

2010

-06

2011

-06

2012

-06

2013

-06

2014

-06

2015

-06

2016

-06

2017

-06

2018

-06

2019

-06

Performance Month

NATIONAL DELINQUENCY RATE – FIRST LIEN MORTGAGESDelinquency Rate 2000-2005 Average Record Low

+8.2%+9.4%

+5.1%

+11.2%

+6.6%

+12.9% +13.2%+10.8%+11.8%

-15%

-10%

-5%

0%

5%

10%

15%

2011

-12

2012

-02

2012

-04

2012

-06

2012

-08

2012

-10

2012

-12

2013

-02

2013

-04

2013

-06

2013

-08

2013

-10

2013

-12

2014

-02

2014

-04

2014

-06

2014

-08

2014

-10

2014

-12

2015

-02

2015

-04

2015

-06

2015

-08

2015

-10

2015

-12

2016

-02

2016

-04

2016

-06

2016

-08

2016

-10

2016

-12

2017

-02

2017

-04

2017

-06

2017

-08

2017

-10

2017

-12

2018

-02

2018

-04

2018

-06

2018

-08

2018

-10

2018

-12

2019

-02

2019

-04

2019

-06

MONTHLY CHANGE IN DELINQUENCY RATESunday Month-Ends Non-Sunday Month-Ends

» June's nearly 11% jump in delinquencies was one of the top five such single-month increases in the past decade and one of the top 15 on record back to 2000

» However, while significant, it wasn’t unexpected given the seasonal and calendar-related pressures weighing on the market

» On average, over the past 20 years, the national delinquency rate has increased by 2.5% in June

» More impactful is that the month ended on a Sunday, which means servicing operations are closed on the last two calendar days of the month and cannot process last-minute payments

» Sunday month-ends have contributed to nine of the 10 largest single-month delinquency rises over the last seven years

» June has ended on a Sunday three times in the past 20 years; the last two (2002 and 2013) saw an average monthly delinquency rate increase of 11.1%, nearly identical to this year

» Delinquencies tend to improve in the month following a Sunday month-end, which may help to counter the seasonal rise typically seen in July

MONTHLY CHANGE IN DELINQUENCY RATE NATIONAL DELINQUENCY RATE – FIRST LIEN MORTGAGES







MORTGAGE MONITOR

JUNE 2019 | 5


+3%

-40%

-20%

0%

+20%

+40%

+60%

+80%

2009-Q

1

2009-Q

2

2009-Q

3

2009-Q

4

2010-Q

1

2010-Q

2

2010-Q

3

2010-Q

4

2011-Q

1

2011-Q

2

2011-Q

3

2011-Q

4

2012-Q

1

2012-Q

2

2012-Q

3

2012-Q

4

2013-Q

1

2013-Q

2

2013-Q

3

2013-Q

4

2014-Q

1

2014-Q

2

2014-Q

3

2014-Q

4

2015-Q

1

2015-Q

2

2015-Q

3

2015-Q

4

2016-Q

1

2016-Q

2

2016-Q

3

2016-Q

4

2017-Q

1

2017-Q

2

2017-Q

3

2017-Q

4

2018-Q

1

2018-Q

2

2018-Q

3

2018-Q

4

2019-Q

1

2019-Q

2

ANNUAL CHANGE IN DEFAULT RATE(EXCLUDING IMPACT FROM 2017 HURRICANE SEASON)

243,

000

0

250000

500000

750000

1000000

1250000

1500000

2000

-Q2

2000

-Q4

2001

-Q2

2001

-Q4

2002

-Q2

2002

-Q4

2003

-Q2

2003

-Q4

2004

-Q2

2004

-Q4

2005

-Q2

2005

-Q4

2006

-Q2

2006

-Q4

2007

-Q2

2007

-Q4

2008

-Q2

2008

-Q4

2009

-Q2

2009

-Q4

2010

-Q2

2010

-Q4

2011

-Q2

2011

-Q4

2012

-Q2

2012

-Q4

2013

-Q2

2013

-Q4

2014

-Q2

2014

-Q4

2015

-Q2

2015

-Q4

2016

-Q2

2016

-Q4

2017

-Q2

2017

-Q4

2018

-Q2

2018

-Q4

2019

-Q2

FIRST LIEN MORTGAGE DEFAULTS BY QUARTER

» An estimated 243K borrowers defaulted on first lien mortgages in Q2 2019

» The national default rate fell by 2% Q/Q in Q2, well below the 9% average decline seen from Q1 to Q2 in recent years

» While the quarter ending on a Sunday certainly played a factor in the rise in defaults, a noticeable overall slowdown in the decline in default activity has been observed

» In fact, the national default rate rose by 3% compared to Q2 2018, the first such annual rise since the financial crisis (adjusting for the 2017 hurricane season)

» Defaults increased across all investor classes to varying degrees; legacy PLS loans experienced the largest increase at +13%, with portfolio-held loans the lowest at +1%

» GSE mortgages, despite still having default rates roughly one half the market average, were up by 3%, while FHA/VA loans (with default rates ~2X the market average) saw a 5% increase

» Overall 90-day delinquencies continue to decline because of strong cure rate volumes

FIRST LIEN MORTGAGE DEFAULTS BY QUARTER ANNUAL CHANGE IN DEFAULT RATE(EXCLUDING IMPACT FROM 2017 HURRICANE SEASON)






MORTGAGE MONITOR

JUNE 2019 | 6

0.25%

0.23%0.12%

0.09%

0.07%

0.20%

0.12%

0.15%

0.20%

0.17%

0.09%

0.17% 0.22%

0.18%0.16%

0.30%

0.19%

0.16%

0.11%

0.17%

0.41%

0.11%

0.17%

0.10%

0.16%

0.15%

0.17%

0.17%

0.10%

0.16%

0.18%

0.23%

0.08%

0.20%

0.20%

0.12%

0.18%

0.19%

0.10%

0.15%

0.08%

0.14%

0.30%

0.15%

GEOGRAPHICAL DISPERSION OF FIRST LIEN DEFAULTSGEOGRAPHICAL DISPERSION OF FIRST LIEN DEFAULTS

» The largest increases were seen in areas impacted by flooding in early 2018 (which also contributed to the overall Q2 rise), namely along the Missouri and Mississippi rivers

» Nebraska experienced the largest increase at +26% year-over-year, followed by South Dakota at +18% and Montana at +15%, but the impact extended beyond flood-stricken areas

» All in, 39 different states saw default rates rise, but a few noteworthy exceptions stand out

» Florida's default rate fell by 11% year-over-year (likely due in part to continued recovery from hurricane Irma); California also saw a decrease of 2%

» While rises varied across the country, a clear distinction in default rates continues on a geographic basis, with the highest being seen in the southern U.S. and the lowest in the north and west

From a geographical perspective, defaults were up across the majority of the country as well






MORTGAGE MONITOR

JUNE 2019 | 7

» Despite the Q2 year-over-year rise in defaults, overall seriously delinquent inventory (loans 90 or more days past due) is down by 17% from last year due to continued strong cure activity

» At roughly a year past due, the average age of serious delinquencies continues to decline as we move further away from the financial crisis, down from more than 500 days at its peak in 2015

» The strong economy, improved equity positions and continued focus on loss mitigation have all contributed to continued improvement in serious delinquency rates

» Normalization of the overall 90+ day delinquent inventory has led to an increased number of “soft cures” – i.e., borrowers self-curing from seriously delinquent to lower stages (30/60 days) of delinquency

» While more borrowers are paying in full out of serious delinquency in recent years, it has not been to the extent of such activity as in 2005

» This suggests that a limited number of borrowers who are falling seriously behind are having to sell their homes to avoid defaulting on their mortgage

» On average, 16% of seriously delinquent loans paid off, paid current or paid down their delinquency each month in Q2 2019

90+ DAY DELINQUENT INVENTORY AVERAGE MONTHLY CURE RATE OF 90+ DAY DQ LOANS







MORTGAGE MONITOR

JUNE 2019 | 8

0%

10%

20%

30%

40%

50%

60%

70%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2000Q2

2001Q2

2002Q2

2003Q2

2004Q2

2005Q2

2006Q2

2007Q2

2008Q2

2009Q2

2010Q2

2011Q2

2012Q2

2013Q2

2014Q2

2015Q2

2016Q2

2017Q2

2018Q2

2019Q2

FORECLOSURE STARTS BY QUARTERFirst Time Foreclosure Starts Repeat Foreclosures % Repeat Foreclosures

FORECLOSURE STARTS BY QUARTER

» A total of 120K foreclosure starts were initiated in Q2 2019, down 7% from Q1 and down 12% year-over-year, marking the lowest quarterly total since the turn of the century

» First-time foreclosure starts were down 20% year-over-year, while repeat foreclosures saw only a 7% decline

» Mississippi had the highest foreclosure start rate of any state, with one in every 180 active mortgages being referred to foreclosure in Q2, followed by Louisiana at 1 in 219

» On the other end of the spectrum, Colorado set the lowest mark of any state at one in 1,199 followed by Washington at one in 1,000 and California at one in 939

» While foreclosure starts continue to see strong year-over-year improvement, Q2's 12% decline in foreclosure starts is slightly below the three-year average of -15%

First-time foreclosure starts accounted for just 37% of all activity, marking the lowest such volume and share of foreclosure activity of any quarter on record






MORTGAGE MONITOR

JUNE 2019 | 9

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2000

Q2

2001

Q2

2002

Q2

2003

Q2

2004

Q2

2005

Q2

2006

Q2

2007

Q2

2008

Q2

2009

Q2

2010

Q2

2011

Q2

2012

Q2

2013

Q2

2014

Q2

2015

Q2

2016

Q2

2017

Q2

2018

Q2

2019

Q2

FORECLOSURE SALES Foreclosure Sales As Percent of Starting FC Inventory (Right Axis)

FORECLOSURE SALES

» Foreclosure sales as a share of starting foreclosure inventory held steady at the 12-month average of 14%, but continue to be well below their pre-crisis average

» All in all, one in every 1,378 homes with a mortgage was lost to foreclosure sale in Q2, the lowest rate on record

» While Florida saw the highest volume of foreclosure sales (3,600), Mississippi had the most as a share of active mortgages, with one in every 517 mortgaged properties being lost to foreclosure sale in Q2

» Utah had the lowest foreclosure sale rate with one in every 10,567 mortgaged properties being lost to sale, followed closely by Colorado at one in 10,283

» As with foreclosure starts, the rate of decline among foreclosure sales has begun to slow slightly; Q2's 18% decline fell below the -23% three-year average

» That said, clear improvement continues in both categories

There were an estimated 37,900 foreclosure completions in Q2, down 2% from 38,700 in Q1, and down 18% from the same time last year






MORTGAGE MONITOR

JUNE 2019 | 10

Here, we take an in-depth look at June’s decline in prepayment activity, while also providing an update on the number of refinance candidates in the market. 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.

JUNE 2019 PREPAYMENT ACTIVITY

1.33

%

1.42

%

2.11

%

1.11

% 1.35

%

1.84

%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vintage

PREPAYMENT SPEEDS (SMM) BY VINTAGEMay 2019 June 2019

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

2014-06

2015-06

2016-06

2017-06

2018-06

2019-06

PREPAYMENT RATE (SMM) BY INVESTOR / PRODUCTGSE FHA/VA PORTFOLIO PRIVATE

» Prepayment activity fell by 7.5% in June, the first such monthly decline since January 2019

» This was particularly surprising given that refinance incentive continues to rise and home sale driven prepayments typically increase from May to June

» Declines were seen widely across servicing portfolios, investor classes, interest types and vintages

» The strongest pullbacks were among portfolio held loans (-12% M/M), high credit score (720+) mortgages (-9% M/M), ARMs (-11% M/M) and 2018 vintage loans (-13% M/M)

» All of these cohorts had been among those seeing the largest increases in prepayment activity in recent months

» The profile of these cohorts suggest the pullback may be due to sluggish refi-driven prepayments in June rather than (or potentially in combination with) lackluster home sale driven prepays

PREPAYMENT RATE (SMM) BY INVESTOR / PRODUCT PREPAYMENT SPEEDS (SMM) BY VINTAGE







MORTGAGE MONITOR

JUNE 2019 | 11

15.Nov '18 4.94%

28.Mar '19 4.06%

25.Apr '19 4.20%

23.May '19 4.06%

6.Jun '19 3.82%

27.Jun '19 3.73%

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

23.Aug 20.Sep 18.Oct 15.Nov 13.Dec 10.Jan 07.Feb 07.Mar 04.Apr 02.May 30.May 27.Jun 25.Jul

FREDDIE MAC – PRIMARY MORTGAGE MARKET SURVEY30-Year FRM 15-Year FRM 5/1-Year ARM

July 25th30YR - 3.75%

8.2M

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

M

1M

2M

3M

4M

5M

6M

7M

8M

9M

10M

2001

-07

2002

-07

2003

-07

2004

-07

2005

-07

2006

-07

2007

-07

2008

-07

2009

-07

2010

-07

2011

-07

2012

-07

2013

-07

2014

-07

2015

-07

2016

-07

2017

-07

2018

-07

TOD

AY*

REFINANCE CANDIDATES IN MILLIONSRefinance Candidates (Left Axis) Freddie 30-Year Fixed Rate (Right Axis)

» There are now 8.2M refinance candidates in the market, 66% more than in May when borrowers would have been applying for the loans driving June prepayment numbers

» The continued rise in refinance incentive suggests that there may be more prepayment and refinance activity on the horizon, despite June’s decline

» Early indications suggest that a drop in refinance activity was behind the June decline

» Rates didn’t fall below 4.25% until the final week of March; assuming a 30-45 day close window, this would have pressed May prepayment activity upward

» Rates then trended upward, peaking back at 4.2% on April 25th, which may have had a slight dampening effect on refinance applications

» A 30-45 day close window from April 25th brings those potential prepays into late May to mid-June – contributing to lackluster June refinance volumes

» Rates have since fallen to 3.75% as of late July, near a two-and-a-half year low, resulting in the most refinance incentive in the market since late 2016

» This suggests the June slump in refi/prepay numbers may simply be a lull rather than an overall lack of borrower sensitivity to the current rate environment

FREDDIE MAC – PRIMARY MORTGAGE MARKET SURVEYREFINANCE CANDIDATES IN MILLIONS







MORTGAGE MONITOR

JUNE 2019 | 12

19.4

M

17.3

M

14.8

M

13.2

M

11.6

M

9.7M

8.2M

6.9M

5.9M

4.9M

3.9M

3.3M

2.9M

2.4M

2.1M

1.8M

1.6M

1.4M

1.2M

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 JUNE 2019)

» Here we look at how many refinance candidates – those who could likely qualify for a refi and shave at least 0.75% off their current interest rate by doing so - under varying rate scenarios

» As mentioned, with rates at 3.75% as of July 25th, 8.2M candidates exist in the market

» Another 1/8 point decline in rates would increase the number of refinance candidates by 1.5M to 9.7M - a 18% rise in refi incentive

» Likewise, a 1/8 point increase in the 30-year rate would decrease the number of refinance candidates by 1.3M to 6.9M, a 16% decline

This chart shows the market’s clear sensitivity to even small interest rate movements

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

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






MORTGAGE MONITOR

JUNE 2019 | 13

Here we examine home price growth trends across the county as well as provide an update on the impacts to affordability from recent interest rate declines. This information has been compiled from Black Knight’s Home Price Index. You may click on each chart to see its contents in high-resolution.

JUNE 2019 HOME PRICES AND AFFORDABILITY

*The National Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest paymemton 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 (Left Axis)

Paym

ent-

to-In

com

e R

atio

NATIONAL PAYMENT-TO-INCOME RATIO* » As 30-year mortgage interest rates fell to 3.75%, the share of the median monthly income needed to make principal and interest payments on the average home purchase fell to 21.3%, a decline from 23.3% in November 2018

» The fact that home prices began to react sharply to November's payment-to-income ratio of 23.3% – a level more affordable than the late 1990s and early 2000s – suggests heightened sensitivity to affordability concerns in today’s market

» Despite the average home price rising by more than $12K from November, today’s lower fixed interest rates have equated to a $108 monthly payment cut on the average home purchased with 20% down

» The decline in 30-year rates has been equivalent to a 15% increase in buying power, meaning that prospective homebuyers shopping for the average-priced home could now pay $45,000 more for a home than last fall while keeping monthly payments the same

Affordability is now the strongest it's been since February 2018, when home price growth started to slow across the country

NATIONAL PAYMENT-TO-INCOME RATIO*





MORTGAGE MONITOR

JUNE 2019 | 14


-11.2%

-13.1%

+2.6%

-9.9%-5.8%

-2.5%

-5.9%

-1.7%

-3.6%

-6.9%

-7.8%

-2.8%

-9.2% -6.4%

-6.7%-6.5%

-3.1%

-0.9%

-7.0%

-3.4%

-4.2%

-5.1%

-4.7%

-2.6%

-5.2%

-3.0%

-3.1%

-7.0%

-0.4%

-1.8%

-9.0%

-9.0%

-1.1%

-5.3%

-8.4%

-5.3%

-7.9%

-4.6%

-2.8%

-2.2%

-4.9%

-7.3%

-1.8%

JULY 2019 VS. LONG-TERM (1995-2003) BENCHMARK

Green areas represent markets that are less a�ordable than long-term benchmarks (CA & HI)

16%

16%19%

34%

23%

17%

31%

21%

17%

13%

21%

16% 13%

21%16%

22%

30%

15%

17%

17%

24%

23%

21%

20%

16%

18%

21%

21%

24%

28%

12%

14%

25%

17%

17%

26%

17%

19%

21%

21%

24%

15%

26%

21%

PAYMENT TO INCOME RATIO BY STATE – JULY 2019

» Whereas nine states were less affordable than their long-term norms back in November, only two remained so as of July

» California remains one of the least affordable states to purchase a home and is one of the two states (Hawaii being the other, with a 35% payment-to-income ratio) that is less affordable than its own long term average

» That said, affordability in the state has improved significantly in recent months; it now requires 34% of the median income to purchase the average California home, down from 38% in November

» Rate declines have improved the affordability outlook across the country, but a familiar geographic division remains

» Housing is least affordable along the western U.S. and parts of the northeast, while with the Midwest and parts of the south are home to some of the lowest payment-to-income ratios

» Not only is housing in the Midwest the most affordable, but it is also the furthest below its own long-term average, as income growth there has been more in line with home price growth than in other areas

PAYMENT-TO-INCOME RATIO BY STATE – JULY 2019 JULY 2019 VS. LONG-TERM (1995-2003) BENCHMARK






MORTGAGE MONITOR

JUNE 2019 | 15

-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

-06

2012

-09

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

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

+0.62%

+3.8%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

-2%

1%

3%

5%

7%

9%

2012

-06

2012

-09

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

BLACK KNIGHT HOME PRICE INDEX1-Month Home Price Growth (Right Axis) Annual Home Price Appreciation (Left Axis)

» Early home price numbers for June suggest that slowing home price growth has now leveled off, driven by falling interest rates and improving home affordability

» The national home price growth rate in June was 3.78%, staying level from May after declining in each of the previous 15 months

» Keep in mind that impacts from interest rate declines take time to manifest in housing market metrics, due to contract, offer, closing and recording timelines

» With 30-year rates not falling to 3.75% until the end of June, the impacts of more recent affordability improvements may not be seen in home sales and price changes until August's or September's housing numbers

BLACK KNIGHT HOME PRICE INDEX


BLACK KNIGHT HOME PRICE INDEX






MORTGAGE MONITOR

JUNE 2019 | 16

+6.3

%

+8.6

%

+7.6

% +11.

3%

+6.8

% +11.

3%

+20.

7%

+3.8

%

+1.3

%

+0.7

%

+0.3

%

+1.0

%

+1.1

%

-6.5

%

-10%

-5%

0%

5%

10%

15%

20%

25%

Uni

ted

Stat

es

Cal

iforn

ia

Los

Ang

eles

, CA

San

Fra

ncis

co, C

A

San

Die

go, C

A

Sea

ttle,

WA

San

Jos

e, C

A

ANNUAL RATE OF HOME PRICE APPRECIATIONJune 2018 June 2019

-7%

-2%

3%

8%

13%

18%

23%

201

2-06

201

2-08

201

2-10

201

2-12

201

3-02

201

3-04

201

3-06

201

3-08

201

3-10

201

3-12

201

4-02

201

4-04

201

4-06

201

4-08

201

4-10

201

4-12

201

5-02

201

5-04

201

5-06

201

5-08

201

5-10

201

5-12

201

6-02

201

6-04

201

6-06

201

6-08

201

6-10

201

6-12

201

7-02

201

7-04

201

7-06

201

7-08

201

7-10

201

7-12

201

8-02

201

8-04

201

8-06

201

8-08

201

8-10

201

8-12

201

9-02

201

9-04

201

9-06

ANNUAL RATE OF HOME PRICE APPRECIATION(NATIONAL VS. CALIFORNIA AND LARGE WEST COAST MARKETS)

United States California Los Angeles, CA San Francisco, CA San Diego, CA San Jose, CA Seattle, WA

» California went from having one of the top five home price growth rates of any state (+8.6%) one year ago to second-to-last as of June 2019, with home price growth slowing to just 1.6% year-over-year

» That said, as rates have declined, home deceleration has begun to level off in California as a whole and several of the West Coast's largest markets

» While prices in Los Angeles, San Francisco, San Diego, CA and Seattle, WA have all risen by 1.1% or less over the past 12 months, the rates at which they're slowing have begun to taper

» Even in San Jose, where home prices are down by more than 6% from June 2018, the rate of decline has begun to flatten

» These are all good signs, given these markets' sharp reaction to rising rates and tightening affordability in late 2018

ANNUAL RATE OF HOME PRICE APPRECIATION(NATIONAL VS. CALIFORNIA AND LARGE WEST COAST MARKETS)


ANNUAL RATE OF HOME PRICE APPRECIATION






MORTGAGE MONITOR

JUNE 2019 | 17

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1998

-06

1999

-06

2000

-06

2001

-06

2002

-06

2003

-06

2004

-06

2005

-06

2006

-06

2007

-06

2008

-06

2009

-06

2010

-06

2011

-06

2012

-06

2013

-06

2014

-06

2015

-06

2016

-06

2017

-06

2018

-06

2019

-06

ANNUAL HOME PRICE GROWTH RATE BY PROPERTY TYPE(BLACK KNIGHT HOME PRICE INDEX)

All Property Types Single Family Condo

» The growth rate of condos had been slowing much more significantly than that of SFRS over the past 12 months

» Prior to that, the growth rate of the two property types was nearly identical; now condo prices are appreciating at a more than 40% slower pace (2.2% vs. 3.9%)

» Condos appreciated faster than SFRs in the late 90s/early 2000s, then saw a much sharper downturn during the financial crisis before experiencing stronger growth rates in 2012–2014 – now the tide is turning again

» Condominium price appreciation has historically been more volatile than that of single family residences

» While this shift could be due to a number of factors, given historical trends, this is a market segment on which Black Knight will be keeping a close eye

An interesting transition is taking place in terms of price growth between condominiums and single family residences (SFRs)


ANNUAL HOME PRICE GROWTH RATE BY PROPERTY TYPE(BLACK KNIGHT HOME PRICE INDEX)





MORTGAGE MONITOR

JUNE 2019 | 18


ANNUAL HOME PRICE GROWTH RATE BY METRO AREA Rank Geography (CBSA) Annual Home Price Growth(March 2019)

1 Boise City, ID +11.9%2 Spokane, WA +10.2%3 Ogden, UT +8.3%4 Salt Lake City, UT +7.9%5 Chattanooga, TN-GA +7.0%6 Memphis, TN-MS-AR +6.9%7 Grand Rapids, MI +6.6%8 Provo, UT +6.6%9 Knoxville, TN +6.5%

10 Colorado Springs, CO +6.5%

Rank Geography (CBSA) Annual Home Price Growth(March 2019)

91 Hartford, CT +1.6%92 Baton Rouge, LA +1.4%93 Seattle, WA +1.1%94 San Diego, CA +1.0%95 Bridgeport, CT +0.8%96 Los Angeles, CA +0.7%97 Oxnard, CA +0.6%98 Scranton, PA +0.4%99 San Francisco, CA +0.3%100 San Jose, CA -6.5%

» The Rocky Mountains region continues to lead the country in terms of home price growth with Idaho the strongest at 10.9% year-over-year and Utah third at +7.6% annual growth

» Boise City, ID; Spokane, WA; Ogden, Salt Lake City and Provo UT; and Colorado Springs, CO all rank in the top 10

» Markets east of the Rockies are beginning to emerge, with Chattanooga, Memphis and Knoxville, TN plus Grand Rapids, MI in the top 10 as well

» 49 of 50 states and 99 of the 100 largest markets saw home prices rise year-over-year

» Delaware was the only state-level exception, with prices there edging down ever so slightly (-0.1%), while San Jose was the lone market standout, with home prices falling by 6.5% from June 2018

» While the slowdown in home prices in the West has begun to level off, Seattle WA and San Diego, Los Angeles, Oxnard, San Francisco and San Jose CA all rank in the bottom 10 of the 100 largest markets in terms of home price growth

ANNUAL HOME PRICE GROWTH RATE BY METRO AREA







MORTGAGE MONITOR

JUNE 2019 | 19

1-MONTH CHANGE IN ANNUAL HOME PRICE GROWTH – JUNE 2019(BLUE = INCREASING | GREEN = SLOWING)

» Many western markets saw annual home price growth slow in June, while a much higher share of markets east of the Rockies saw annual appreciation rise

» This matches the trend of much tighter affordability in western markets (even factoring in recent rate declines) and a subsequent market reaction

Looking at single month changes in annual home price growth reveals some interesting trends emerge


1-MONTH CHANGE IN ANNUAL HOME PRICE GROWTH – JUNE 2019(BLUE = INCREASING | GREEN = SLOWING)





MORTGAGE MONITOR

JUNE 2019 | 20


PEAK TO CURRENT HOME PRICE CHANGE BY METRO AREABLUE = HOME PRICES NOW ABOVE PRE-RECESSION (~2006) PEAK

GREEN = HOME PRICES HAVE NOT RECOVERED TO PRE-RECESSION (~2006) LEVELS Rank Geography (CBSA) Difference from 2006 Peak1 Denver, CO +69.3%2 San Jose, CA +60.0%3 Austin, TX +54.7%4 Dallas, TX +54.4%5 Nashville, TN +45.2%6 Ogden-Clearfield, UT +44.0%7 Buffalo, NY +40.6%8 Salt Lake City, UT +39.3%9 Colorado Springs, CO +38.2%

10 Grand Rapids, MI +38.2%

10 MARKETS FURTHEST ABOVE 2006 PEAK VALUES

T

Stockton, CA

» The geographic differences in post-recession recovery are clearly seen in the map above, where areas that have surpassed their pre-crisis peaks shown in blue and those that still lag in green

» Many parts of California, Nevada, New Mexico and Florida, along with the greater Chicago metro area and patches of the northeast, still remain below pre-recession levels

» Home prices in 25 of the 100 largest markets remain below peak levels, while prices in 75 markets have fully recovered from the financial crisis - in some areas, decidedly so

» Denver, for example, leads the nation with home prices there now 69% above their 2006 peak

» In San Jose – where prices have fallen by 6.5% year-over-year – the average home price is still 60% above pre-recession levels

PEAK TO CURRENT HOME PRICE CHANGE BY METRO AREABLUE = HOME PRICES NOW ABOVE PRE-RECESSION (~2006) PEAK

GREEN = HOME PRICES HAVE NOT RECOVERED TO PRE-RECESSION (~2006) LEVELS







MORTGAGE MONITOR

JUNE 2019 | 21

JUNE 2019 DATA SUMMARY

JUNE 2019 APPENDIX





MORTGAGE MONITOR

JUNE 2019 | 22

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 50,541,353 1,298,682 444,594 831,284 659,237 3,233,797 71,900 495 1,047 126.1%1/31/17 50,871,357 1,108,712 389,768 663,521 480,598 2,642,599 70,357 454 1,013 138.1%1/31/18 51,155,753 1,083,162 412,676 706,623 336,613 2,539,074 62,312 364 932 209.9%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 51,854,081 1,138,116 362,154 500,822 263,707 2,264,798 40,289 385 839 189.9%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%

LOAN COUNTS AND AVERAGE DAYS DELINQUENT

JUNE 2019 APPENDIX





MORTGAGE MONITOR

JUNE 2019 | 23

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 3.7% 0.5% 4.2% -2.0% National 3.7% 0.5% 4.2% -2.0% National 3.7% 0.5% 4.2% -2.0%MS 10.1% 0.7% 10.8% 10.7% TN 4.8% 0.2% 5.1% -4.4% NH 3.6% 0.3% 3.9% 0.4%LA* 7.2% 0.9% 8.1% 3.8% OH* 4.4% 0.7% 5.0% 1.2% VA 3.5% 0.2% 3.7% 6.0%AL 6.8% 0.4% 7.2% 7.6% KS* 4.3% 0.5% 4.7% 2.9% AK 3.1% 0.3% 3.4% -1.2%WV 6.3% 0.6% 6.9% 3.6% NJ* 3.9% 0.8% 4.7% -8.0% WY 3.1% 0.3% 3.3% -6.9%AR 5.7% 0.5% 6.2% 8.3% VT* 3.6% 1.1% 4.7% 2.9% NV 2.6% 0.5% 3.1% -9.1%IN* 5.4% 0.7% 6.1% 3.6% NM* 3.8% 0.8% 4.6% 1.8% SD* 2.8% 0.4% 3.1% 21.0%OK* 5.1% 0.8% 5.9% 3.9% NC 4.3% 0.4% 4.6% 3.1% AZ 2.7% 0.2% 2.9% 4.7%ME* 4.1% 1.7% 5.8% -1.6% IL* 3.8% 0.7% 4.5% 3.7% DC 2.3% 0.6% 2.9% -9.2%PA* 4.9% 0.7% 5.7% 1.4% KY* 3.8% 0.6% 4.4% -1.0% MN 2.6% 0.2% 2.8% 12.4%RI 4.8% 0.8% 5.6% 2.7% FL* 3.6% 0.8% 4.4% -22.0% MT 2.4% 0.3% 2.7% 8.8%DE* 4.7% 0.8% 5.5% 0.6% MO 4.1% 0.3% 4.4% 2.9% UT 2.5% 0.2% 2.7% -3.4%GA 5.2% 0.3% 5.5% 2.1% NE* 4.0% 0.2% 4.2% 28.9% ND* 2.0% 0.5% 2.5% 5.9%SC* 4.9% 0.6% 5.5% 5.8% IA* 3.6% 0.5% 4.2% 11.6% CA 2.1% 0.2% 2.3% -8.6%MD* 4.8% 0.6% 5.4% 2.6% MI 3.9% 0.2% 4.1% 1.9% ID 2.0% 0.2% 2.2% -3.8%NY* 3.8% 1.5% 5.4% -4.0% MA 3.6% 0.5% 4.1% -4.2% WA 1.9% 0.2% 2.1% -7.7%CT* 4.3% 0.9% 5.3% -1.8% WI* 3.4% 0.5% 3.9% 2.8% OR 1.8% 0.3% 2.1% -4.2%TX 4.8% 0.4% 5.1% -2.9% HI* 2.4% 1.5% 3.9% -15.9% CO 1.8% 0.1% 1.9% 0.0%

* Indicates Judicial State

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

JUNE 2019 APPENDIX





MORTGAGE MONITOR

JUNE 2019 | 24

Mortgage Monitor Disclosures and Definitions

You can reach us by email [email protected]

Follow us on Twitter@Black_KnightInc

JUNE 2019 DISCLOSURES



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

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

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

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


MORTGAGE MONITOR

JUNE 2019 | 25

JUNE 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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