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35 » VISIT US ONLINE @ DSNEWS.COM STEADY DECLINE IN SERIOUS DELINQUENCIES TransUnion's 2019 Consumer Credit Report forecasts an increase in originations and consumer balances for most credit products, while serious delinquency rates are likely to decline or remain steady. is will lead to lenders expanding their base of subprime and near-prime borrowers—a positive sign for both lenders and borrowers, according to the report. e report also predicts lenders will be less risk-averse with the steady pace of delinquency rates. is will also help borrowers to showcase their ability to better manage their finances, it said. Subprime borrowers will continue to have access to loans, it noted. Interestingly, the percentage of subprime borrowers originating loans remains far below what was recorded at the onset of the last recession, according to the forecast—wherein 9 percent of borrowers in this group originated mortgage loans in 2007. Pointing to home prices, the forecast indicated that though homes are becoming more expensive, the increase in home equity will benefit buyers. e downward trend in mortgage originations which has been steady over several quarters in the past will continue into 2019 as a result of rising interest rates, surging home prices, and supply constraints, the report noted. A surge in average balances is expected in 2019, growing from an anticipated $208,831 at the end of Q 4 of this year to $218,490 by the end of Q 4 2019, a 4.6 percent increase. Delinquencies will also continue to drop from 1.62 percent by the end of this year to 1.45 percent by the end of 2019—a consistent downward trend since 2010 on a year-over- year basis, the report stated. "While overall originations will be down in 2019, increases in home prices are resulting in record levels of home equity, which provide homeowners more opportunities to tap into low APR home equity products. is will particularly benefit consumers deciding to pay off other higher interest rate products—as well as consumers finding it difficult to afford a new 'move up' house, who instead opt to invest in improving their existing home," said Joe Mellman, SVP, Mortgage Line at TransUnion. TransUnion expects nonprime originations to decrease by 2.4 percent "as the composition of new accounts changes." e prime segment will see a resurgence in origination growth in the coming year, indicating lender's desire for credit quality for their portfolios as delinquency continues to increase. OCC'S LATEST FORECLOSURE REPORT Servicers of some of the largest banks in the U.S. initiated 28,508 new foreclosures during the third quarter of 2018, according to the Office of the Comptroller of Currency's (OCC's) Mortgage Metrics report. is marked a 3.7 percent quarter-over-quarter decrease and a 16.8 percent decline from 2017. Home forfeiture actions during the quarter that included completed foreclosure sales, short sales, and deed-in-lieu-of-foreclosure action, decreased 30.4 percent from last year to 15,506. e report is based on data collected on first-lien residential mortgage loans serviced by seven national banks with large mortgage servicing portfolios. ey include Bank of America, Citibank, HSBC, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo. e report excludes mortgage loans like junior liens, home equity lines of credit (HELOC), and reverse mortgages. Looking at loan modifications in Q 3, the report indicated that servicers completed 25,701 modifications, a decrease of 21.3 percent over the last quarter. Of these, 21,766 were combination modifications that included "multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension." Among the 21,766 completed combination modifications, the report said, 96.6 percent included capitalization of delinquent interest and fees, 43.4 percent included an interest rate reduction or freeze, 96 percent included a term extension, 1.2 percent a principal reduction, and 13.5 percent included principal deferral. e report also said that of the 23,427 modifications that were completed during the first quarter of 2018, "servicers reported 3,580, or 15.3 percent, were 60 or more days past due or in the process of foreclosure at the end of the month that they became six months old." e report also looked at the overall mortgage portfolio and performance of the loans. It revealed that as of September 30, 2018, the reporting banks had serviced 17.2 million first-lien mortgage loans with $3.26 trillion in unpaid principal balances indicating 32 percent of all residential mortgage debt outstanding in the U.S. e OCC said that banks reported an improvement in the overall mortgage performance in Q 3 compared to the same period a year ago with 95.4 percent mortgages current and performing compared with 94.8 percent a year ago. of FHA loans that are seriously delinquent were originated between 2010 and 2018. Source: CoreLogic Report, released in January 2019. STAT INSIGHT 48%

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