Housing Finance at a Glance: Monthly Chartbooks
The February 2018 edition of At A Glance, the Housing Finance Policy Center’s reference guide for mortgage and housing market data, includes updated figures describing GSE guarantee fees, mortgage delinquency rates, nonbank originator shares in the agency market and the composition of the mortgage insurance market.
Continued impact of fall hurricanes on mortgage delinquencies
The three hurricanes – Harvey, Irma and Maria that hit Texas, Florida and Puerto Rico last fall continue to take their toll on mortgage delinquencies, per latest data from the Mortgage Bankers Association for Q4 2017. The previous release of this data (Q3 2017) showed a large (and expected) increase in the 30 day delinquency rate in the affected areas, as we had discussed in the November chartbook introduction.
The updated delinquency data for Q4 2017 is useful in studying the delinquency pattern beyond the initial 30 days. At the nationwide level, the D30 rate declined from Q3 to Q4 2017 for all loans (from 2.84 to 2.75 percent), likely because some borrowers resumed monthly payments after the initial shock, and others became 60 or more days delinquent; indeed, D60 and D90 rates increased from 0.86 to 0.99 percent and from 1.29 to 1.72 percent respectively.
This general pattern held across all three channels - conventional, FHA and VA. Although serious delinquency rates will remain elevated for some time as these mortgages get resolved, the decline in the 30 day delinquency rate indicates that fewer borrowers became newly delinquent in the fourth quarter, further suggesting that the worst might be over. More recent data from Ginnie Mae, for FHA and VA delinquencies confirms that we have seen the highs in the delinquency rate.
Hurricane Maria. As of Q4 2017, 5.85 percent of all mortgages in Puerto Rico were 30 to 59 days delinquent, 6.05 percent were 60 to 89 days delinquent, 18.5 percent were 90 days more delinquent and another 6.05 percent were in foreclosure. Thus, a total of 36.9 percent of all mortgages in Puerto Rico were in some stage of nonperformance. The high 90-day delinquency rate in particular is concerning because it suggests that a large number of Puerto Rican homeowners were unable to resume payments even after three months.
The 90-day DQ rate, while elevated in Florida and Texas, is orders of magnitude higher in Puerto Rico. We expect these delinquency rates to decline next quarter, as these loans get resolved, many through reperformance. But that won’t necessarily be the end of the problem, especially for Puerto Rico. Only 40 percent of homes in Puerto Rico have mortgages, compared with 64 percent in the US. Many residents already have or will become homeless; others will be forced to live in unsafe structures. Weakness in the local economy and high unemployment rates will persist, forcing many more to migrate to the mainland and start from scratch. Indeed, Hurricane Maria will continue to take a toll on the people of Puerto Rico long after the current delinquency cycle improves.