As Agency first-time buyer mortgages get riskier, the gap between fist-time buyer mortgage risk and repeat buyer mortgage risk continues to get wider, according to data released on Monday by the American Enterprise Institute’s International Center on Housing Risk. The Agency First-Time Buyer Mortgage Risk Index rose year-over-year by zero point 7 percentage points in February up to 15 point 7 percent, meaning that 15 point 7 percent of Agency mortgages would default if they experienced economic stress comparable to the 2007-08 financial crisis.
Meanwhile, the Agency FBMRI is now 5 and three-quarters percentage points higher than the mortgage risk index for repeat homebuyers, up 5 percentage points over-the-year. First-time homebuyers have been responsible for essentially all of the year-over-year increase in the composite National Mortgage Risk Index since early 2015, which is a further indicator that the gap is growing larger for risk on first-time buyer mortgages and repeat buyer mortgages.
Foreclosures are way down and many housing fundamentals are at pre-crisis levels. But for those borrowers still facing foreclosure or at risk of defaulting, permanent loan modification remains a popular option. According to data released on Monday by HOPE NOW, another 26 thousand homeowners received permanent loan modifications during the month of January. That number includes modifications completed under both proprietary programs and the government’s Home Affordable Modification Program, which is set to expire at the end of this year.