by Calculated Risk on 12/07/2015 08:35:00 AM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for October today. According to BKFS, 4.77% of mortgages were delinquent in October, down from 4.87% in September. BKFS reported that 1.43% of mortgages were in the foreclosure process.

This gives a total of 6.20% delinquent or in foreclosure.

Press Release: Black Knight’s October Mortgage Monitor: Despite New GSE Products, FHA/VA Still Dominate High-LTV Lending; Cash Share of Residential Sales Hits 7-Year Low

Today, the Data & Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Mortgage Monitor Report, based on data as of the end of October 2015. This month, Black Knight looked at high loan-to-value (LTV) products – greater than 95 percent LTV – in light of the GSEs’ reintroduction of high-LTV products at the end of 2014, coupled with the 50-basis-point reduction in FHA annual mortgage insurance premiums earlier this year. Despite the renewed availability of GSE products, the data shows that high-LTV lending is still primarily the province of the FHA/VA. As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, the FHA/VA has been the primary driver in what is an expanding segment of the purchase origination market.

“High-LTV purchase mortgage originations are up 20 percent in the third quarter over last year,” said Graboske. “That’s compared to an approximately 13 percent increase for the purchase market overall. High-LTV products now account for 23 percent of all purchase originations. What’s particularly interesting is how heavily this market is dominated by FHA/VA. Back in 2007, the GSEs made up over 45 percent of high-LTV purchase originations, while FHA/VA lending made up roughly one-third. Since 2009, FHA/VA products have made up over 90 percent of high-LTV purchase originations every year, and the same is true in 2015, even with the GSEs having reintroduced their own 97 percent LTV products. In fact, those products have accounted for less than 3 percent of all high-LTV originations so far this year.

“As we reported last month, recent increases in purchase lending have been driven primarily by higher-credit- score borrowers, and these high-LTV products are no exception. We’ve seen average credit scores on high-LTV FHA/VA loans rise six points from last year to 706. Of course, scores for GSE and portfolio high-LTV loans are roughly 35 points higher still. We’ve actually seen annual declines in high-LTV lending among 620-660 credit scores for each of the past six months even though overall high-LTV purchase volumes have risen in each of those months. This may be attributed to tightening credit, or it may be that the FHA’s reduced annual mortgage insurance – which FHA estimates will reduce borrowers’ mortgage payments by $900/year – has enticed some higher-credit borrowers into those FHA products.”

Click on graph for larger image.

This graph from Black Knight shows the purchase origination distribution by LTV and investor (FHA, GSE and portfolio).

From Black Knight:

High-LTV loans account for 77 percent of FHA/ VA purchase originations through August this year, as compared to only 1 percent of GSE purchase originations

Almost 2/3 of portfolio purchase originations are less than 79 percent LTV products, but there is also some exposure to higher LTV products as well, albeit in higher credit tranches

Nearly 75 percent of high LTV portfolio products have credit scores above 700, while over half of FHA/VA originations have credit scores below 700

There is much more in the mortgage monitor.