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Foreclosures Levels Continue to Drop

Mortgage performance improved in August, according to the First Look at the latest mortgage performance data from Black Knight.

Black Knight states that foreclosure starts hit an 18-year low in August, at 36.2K for the month. Foreclosure starts were down over 23% from this time last year, and the the number of loans in active foreclosure, at 253K, is now the smallest it’s been since 2005.

Additionally, prepayments increased by 5% from July to reach a three-year high, and August’s prepayment rate was up 62% from the same time last year and 2.5X the 18-year low we hit back in January. Black Knight also notes that despite a slight seasonal uptick in the number of loans 30 or more days past due, there was more growth in the number of active mortgages to offset this; as a result, the overall national delinquency rate declined slightly.

ATTOM Data Solutions reported that one in every 2,554 U.S. properties received a foreclosure filing during the month of August. According to the analysis, the states with the worst foreclosure rates in August 2019 were Delaware (one in every 1,106 housing units); New Jersey (one in every 1,192 housing units); Maryland (one in every 1,218 housing units); Illinois (one in every 1,562 housing units); and Florida (one in every 1,633 housing units).

In a previous Mortgage Monitor report, Black Knight Data & Analytics President Ben Graboske explains that falling interest rates and a subsequent increase in rate/term refinances has worked in servicers’ favor.

“As we’ve reported in the past, retention rates tend to be higher for rate/term refinances than any other type of transaction, and that’s just what we observed as of the end of Q2 2019,” said Graboske. “Falling rates and an abundance of refinance candidates were primary drivers behind servicers retaining 24% of all refinancing borrowers – the highest such retention rate since late 2017 – and 30% of rate/term borrowers specifically. While losing the business of more than two out of every three rate-driven refinance customers is not exactly extraordinary performance, it is significantly better than the sub-20% retention rates seen throughout much of 2018. The good news is that interest rates are at three-year lows, and anecdotal evidence suggests that in recent weeks, mortgage lenders had been inundated with inbound refinance business that’s relatively easy to retain.”

Black Knight will release its full Mortgage Monitor Report on October 7.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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