by Calculated Risk on 2/06/2024 08:58:00 AM
Today, in the Real Estate Newsletter: ICE (Black Knight) Mortgage Monitor: “Positive Signs in Housing, Mortgage Markets”
There have been very few low credit score mortgage originations. During the housing bubble, many of the low credit score loans were made through the private-labeled securities market.
• In the absence of any meaningful private-labeled securities market, the rise in FHA delinquencies is worth watching, as FHA and VA loans can be early indicators of broader mortgage performance trends
• While low credit score lending hit a record low, by count, in 2023, 90% below the years leading up to the great financial crisis, FHA and VA products have accounted for roughly 70% of sub-660 credit score lending for most of the past decade
• This is a stark contrast from the 2004-2006 era when FHA and VA lending played a minimal role (<10%) in lower credit score lending, which then was dominated by loans backed by private-labeled securities and held in portfolio
• Given the low volume of sub-660 credit score lending and that overall delinquencies remain historically low, FHA and VA delinquencies are not currently a cause for significant broad based market concern, but are worth keeping a close eye on for those invested in GNMA securities as well as non-banks that participate more heavily in FHA and VA lending
There is much more in the article.