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"

Brief excerpt:

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.