Black Knight's January Mortgage Monitor: First-Time and Repeat Foreclosure Starts at 12-Month High; National Home Affordability Still Better Than Pre-Bubble Average

JACKSONVILLE, Fla., March 9, 2015 /PRNewswire/ --

• Repeat foreclosures up 11 percent month-over-month, make up over half of January starts; first-time starts up just 0.33 percent
• Foreclosure starts up almost 10 percent month-over-month in judicial states vs. just 1.7 percent in non-judicial
• Using median home price/income level, national mortgage payment-to-income ratio at 21 percent
• Washington, D.C., Hawaii and California currently have least affordable housing nationwide

Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, based on data as of the end of January 2015. The month's data showed that both first-time and repeat foreclosure starts reached 12-month highs, although there was clear separation in the levels of increase between the two. According to Trey Barnes, Black Knight's senior vice president of Loan Data Products, separation also continues to be seen between judicial and non-judicial foreclosure states across multiple performance indicators.

"Overall foreclosure starts hit a 12-month high in January, and that held true when looking at both first-time and repeat foreclosure starts individually," said Barnes. "Repeat foreclosure starts made up 51 percent of all foreclosure starts and increased 11 percent from December. In contrast, first-time foreclosure starts were up just a fraction of a percent from the month prior. Similarly, Black Knight found that January foreclosure starts jumped about 10 percent from December in judicial states as compared to just a 1.7 percent increase in non-judicial states. Judicial states are also seeing higher levels of both new problem loans and serious delinquencies (loans 90 or more days delinquent, but not yet in foreclosure) than non-judicial states, although volumes are down overall in both categories.

"At the same time, foreclosure sale counts – essentially, completed foreclosures – have been decreasing more rapidly than the inventory of seriously delinquent loans in both judicial and non-judicial states. As a result, foreclosure pipeline ratios, the backlog in months of foreclosure and 90-day delinquent inventory based on current foreclosure sale rates, have been increasing across the board. In judicial states, the pipeline ratio now stands at 58 months; up quite a bit from the 47 months seen in 2013, but a far cry from its high of 118 months a couple of years before that. In recent months, non-judicial pipeline ratios have reached similar levels to judicial pipeline ratios. As of January, the non-judicial pipeline ratio was at 53 months, close to an all-time high. Throughout the housing crisis, non-judicial pipeline ratios were significantly lower than those in judicial states."

Additionally, the data showed the impact of anti dual-tracking legislation on the foreclosure process. After legislation went into effect prohibiting the simultaneous pursuit of loan modification efforts and foreclosure processes, the average months delinquent for first time foreclosure starts shot up from 6.5 months to 14.6 months, and, as mandated, foreclosure starts on loans less than 120 days delinquent were virtually nonexistent in 2014. It is important to note that, as servicers have adapted to the new requirements, the effect on foreclosure start timelines has become less pronounced. As of January 2015, first-time foreclosure starts were occurring at an average of 9.1 months delinquent.

Black Knight also revisited the subject of home affordability (calculated as the ratio of a fixed-rate mortgage payment on the median home price to the median monthly household income) and found that – despite two years of home price increases at the national level – affordability is better now than it was in the years prior to the housing bubble due primarily to the current low interest rate environment. Nationally, the payment-to-income ratio now stands at 21 percent, as compared to an average of 26 percent during the 2000-2002 period just prior to drastically increasing home prices. This is up from the 17.6 percent ratio seen at the trough in October 2012, but down significantly from the July 2006 high of 34.7 percent. At the national level, home prices could rise another 25 percent, or interest rates could jump almost two percent, before the affordability ratio would reach pre-bubble levels. Of course, the level of affordability varies by state, and some areas of the country – Washington D.C., Hawaii and Alaska – are actually less affordable now than in the pre-bubble years. Overall, Washington, D.C., Hawaii and California are the least affordable areas of the country, while a one percent increase in interest rates would push an additional seven states above 2000-2002 payment-to-income levels.

As was reported in Black Knight's most recent First Look release, other key 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.

About the Mortgage Monitor
The Data and Analytics division of Black Knight Financial Services manages the nation's leading repository of loan-level residential mortgage data and performance information on approximately two-thirds of the overall market, including tens of millions of loans across the spectrum of credit products and more than 140 million historical records. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: http://www.BKFS.com/CorporateInformation/NewsRoom/Pages/Mortgage-Monitor.aspx

About Black Knight Financial Services, LLC

Black Knight Financial Services, a Fidelity National Financial FNF company, is the mortgage and finance industries' leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle.

Black Knight Financial Services is committed to being the premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. For more information on Black Knight Financial Services, please visit www.BKFS.com.

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SOURCE Black Knight Financial Services