Distressed

Economic turbulence affected borrowers during the quarter and will likely impact their ability to refinance maturing loans, the Mortgage Bankers Association said.

The 51 basis point increase was inevitable after the late payment rate reached a record low in the third quarter, the Mortgage Bankers Association said.

New starts surged 75% compared to a year ago, but repossessions saw their first decline in one-and-a-half years, according to Attom.

Mortgage prepayment rates also fell to a new low for the third consecutive month in December, according to Black Knight.

Foreclosure prevention actions overall fell for the sixth time in seven months in October, according to the FHFA.

The share of loans with suspended payments remained steady as 2022 ended, but that could change this year if unemployment increases in line with forecasts, according to the Mortgage Bankers Association.

The measure enacted on Dec. 30, 2022 applies retroactively and could add servicing risks that lending divisions will likely consider in underwriting and pricing on new loans originated in the state.

The overall share of distressed mortgages fell in every state, but the effects of Hurricane Ian led to a small uptick in early-stage late payments compared to one year ago, CoreLogic said.

Foreclosure starts also increased by over 19% between October and November but remain below pre-pandemic levels.

Deterioration in credit quality should put strain on collateral originated in late 2021 and early 2022, affecting performance, Barclays Credit Research said.

Home prices dropped again on a monthly basis in October, exacerbating the loss in home equity among recent buyers, but the size of the falloff was the smallest since June.

The share of home loans late by more than 30 days or in foreclosure in August inched back down to 2.8% from 3% the previous month, according to CoreLogic.

Three percent of all mortgages were 30 or more days past due on their scheduled payment or in foreclosure in July.

The month ended with 54,000 less properties for which the borrower was at least 30 days or more late on their payments, Black Knight said.

Payment suspensions on loans securitized through the government-backed market stopped falling in May, plateaued over the summer, and reversed course last month, according to an industry trade association.

Still near historic low levels, the share of borrowers entering the early stages of delinquency in June increased 0.1 percentage point.

Completions in August remained far lower than before COVID-19 arrived in the United States but initial actions rose fast enough to potentially meet expectations that they'll normalize in 2023.

A mix of new distress and declining cures drove the uptick, according to dv01.

The number of these mortgage borrowers getting back on track with payments has been roughly halved since March, according to Black Knight's initial take on July numbers.

Recent reports highlight the question of how much wage growth can do to sustain loan performance as pandemic relief gets rolled back, consumer costs rise and the housing market cools.