Distressed

Recent reports by Standard & Poor’s, Experian and an industry trade group show changes in loan performance and credit over the course of the past month.

An uptick in pandemic-related payment suspensions reflecting new or restarted plan activity previously occurred as the omicron variant spread, but activity has since subsided.

While the significant drop in suspended payments overall from the pandemic’s peak suggests many have recovered from related hardships, the uptick points to some new distress.

The number of loans with payments 90-plus days late but not in foreclosure has fallen below 1 million, but the total is still double pre-pandemic levels, according to Black Knight’s measure.

The residential market is generally healthy, but distress is growing in areas where foreclosures are more common, homes are less affordable, and more properties are underwater, Attom finds.

The remaining 705,000 borrowers with pandemic-related payment suspensions may have complex or recent hardships to sort out, but the majority who had plans have exited them.

The coming change will further test the effectiveness of Biden administration policies aimed at putting more affordable properties in the hands of consumers or charitable organizations.

COVID loan forbearance championed by progressives has created a new, permanent class of distressed borrower, Whalen writes.

But the number remaining was still more than twice as high as pre-pandemic, according to Black Knight.

Further declines occurred in November, albeit at a slower pace than in October, according to a new loan performance report from the Mortgage Bankers Association.

More than half of respondents to a recent Arizent survey think one-stop shops will be the biggest disruptor in the next three years, followed by all-cash purchase programs and iBuyers.

However, the seven institutions in the Office of the Comptroller of the Currency study service 13% fewer loans compared with the third quarter of last year.

While over 112,000 loans exited plans in the past week, there is only a modest opportunity for continued improvement in the near term, Black Knight said.

Rising home values also brought 70,000 properties out of underwater status during the three-month period, CoreLogic said.

Axylyum, which recently released information about its first named client, offers an alternative to other forms of risk sharing for private companies originating income-producing mortgages.

Like the stock market rout around news of the Omicron variant, the recent increase in payment suspensions suggests financial troubles associated with the pandemic may not be over.

Due in part to pandemic-related forbearance, GSE portfolio loans with year-plus delinquencies hit the highest point seen since the Federal Housing Finance Agency started tracking them in 2015.

Activity in loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs drove the increase in new requests, according to Black Knight.

The decline in late payments recorded in a trade group survey raise hope that many servicers will bear up under a wave of tighter enforcement coming from regulators.

Mortgage defaults, bank repossessions and auctions rose for the third month in a row, according to Attom Data Solutions.