In a recent post, we discussed macro factors driving delinquency rates across the mortgage landscape.[1] In this brief update, we make two comments, one fundamental and the second technical: First, we look at the possibility that the relatively greater financial distress observed among FHA borrowers compared to conforming borrowers at present is due, at least in part, to the relatively higher debt service levels held in the former cohort. Second, we perform an exercise matching FHA loan in HMDA to those in the Ginnie Mae disclosures to measure natural disasters’ impact on loan performance.
Debt and Delinquency [DQ] In our prior post, we noted the large differential in DQs across consumer sectors: autos, credit cards, and mortgages since interest rates began to rise in early 2022. We now have an additional quarter of data from the Federal Reserve Bank of NY which is summarized here: Recursion data was utilized in a story entitled “Fannie, Freddie Loan Requests Surging” published by Commercial Mortgage Alert on September 13, 2024. The story reports that the GSEs have recently received a “flood” of loan applications, which could indicate that CMBS production could pick up in the last half of 2024 after a lackluster start to the year. The story states “In the eight months through August, Fannie purchased $27.8 billion of multifamily mortgages, down 22% from the prior-year period, according to data from Recursion Co.”
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