Bad mortgages in Vermont up for the month, down for the year

Vermont Business Magazine Non-current mortgages in Vermont are down for the month of August compared to the same time last year, but are up slightly compared to the previous two months, according to a national analyst. Foreclosures (2.3 percent)were down one-tenth from July and August, but delinquencies have risen, from 4.8 percent in June and 4.7 percent in July to 5.1 percent in August. As with every state but Louisiana, Vermont is enjoying long a decline in bad mortgages. Vermont is down 7.9 percent in the number of non-current mortgages (foreclosure plus delinquent) and the US average decline is 13.1 percent, year-over-year. However, Vermont is now near the middle of the pack in total bad mortgages. At 7.7 percent, Vermont is only .2 percent ahead of the national average, as the mortgage devastation from the Great Recession winds down.

The Data and Analytics division of Black Knight Financial Services' Mortgage Monitor Report is based on data as of the end of August 2014. Looking at the weighted average loan age among the active mortgage population, Black Knight found that while loan age varies among different credit score groups, in general the average loan age nationally has been rising steadily. According to Kostya Gradushy, Black Knight’s manager of Research and Analytics, the weighted average loan age has reached its highest point ever.

“In terms of the entire active mortgage population, average loan age has been rising steadily for at least the last nine years,” said Gradushy. “The high volume of originations in 2013 resulted in a temporary slowdown. However, the average loan age since then has hit its highest level ever at 54 months. Reviewing the data at a more granular level, we see that the age of loans with credit scores of 750 and above has remained relatively constant for the last five years. However, lower credit score loans – particularly those with scores below 700 – have seen dramatic increases in average age.”

“We also looked again at mortgage performance and found delinquencies in 2012-2014 vintage loans lower than any of the prior seven years. In fact, even among borrowers with lower credit scores, these vintages are outperforming all previous vintages. This holds true for FHA mortgages as well, where we found that early-stage delinquencies were lower than in all pre-2012 vintages.”

Black Knight also examined the status of loans that had been in foreclosure at the end of 2013 and found that nearly half (49 percent) of those loans remained in that status as of August 2014. Further, 25 percent of these loans had been modified at some point in the last eight months before falling back into foreclosure. Looking more widely at modifications completed on loans in foreclosure over the past four years, Black Knight found the three-month re-default rate on 2014 modifications to be the highest since 2011. This held true only for modifications on loans in foreclosure, though. Re-default rates on modifications of loans in delinquent statuses of both 90 days and 120 days or more past due actually saw re-default rates decline again in 2014, as they have for the last four years.

Other key US results include:

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

*Seriously delinquent loans are those past-due 90 days or more.

Totals are extrapolated based on Black Knight Financial Services’ loan-level database of mortgage assets.