Servicing

Inflation and higher interest rates are hurting distressed borrowers, but low unemployment, remaining forbearance and loss mitigation options are still blunting their impacts, recent loan-performance numbers suggest.

Delinquencies are likely to rise if both interest rates and inflation continue their upward movements, a DBRS Morningstar report said.

The government-sponsored enterprises divested themselves of the largest share of these loans since they first began selling them in 2014, a Federal Housing Finance Agency report found.

But second home sales — which were below pre-pandemic levels for the first time in 24 months during May — may slow in the future as those in vulnerable areas get tougher to insure.

Following the third most active season on record, the 2022 forecast predicts La Niña will drive increased Atlantic storm development.

But a slower-than-anticipated rate of repossessions suggest distressed homeowners are finding solutions.

Rising interest rates eliminated any refinance incentive for 30% of the loans analyzed by Standard & Poor's, marking a turnaround from the start of the year when prepay speeds were expected to increase

But for prospective buyers, soaring home prices in April pushed affordability closer to the all-time low set in June 2006.

The inability to include both types together in standard loan pools has been one of the hurdles to the adoption of digital collateral.

The effects on nonbanks will depend on the mix between their production and servicing operations, Fitch Ratings said.