Of the approximately 952,000 borrowers who are 90 or more days past due but not yet in foreclosure, 62% have been through some form of home retention program, according to the latest report from Black Knight Financial Services.
Black Knight Data & Analytics Senior Vice President Ben Graboske explained that while overall retention actions have decreased over the past two years, they are making up a greater share of that seriously delinquent inventory. ?
“In analyzing the data around home retention initiatives, we found that nearly one in five seriously delinquent borrowers are currently taking part in an active trial modification or payment plan,” said Graboske. “With 62% of loans 90 or more days delinquent but not yet in foreclosure having been through some form of home retention action, we’re currently seeing the highest level of saturation yet, but that’s only marginally up from last year – in other words, that saturation level is beginning to flatten. Overall, home retention actions have declined 42% over the past two years, but at the same time have increased nine% as a share of that seriously delinquent inventory.
“We’re also starting to see some redundancy in this activity – 70% of all new trial modifications and repayment plans have already been through one or more home retention actions previously,” he said.
Drilling down into the home retention data on a geographic level, Black Knight found that Washington, D.C., led the nation with 67% of its seriously delinquent inventory having gone through some sort of home retention activity; of these, 26% are currently in an active trial modification or repayment plan. Maryland, Georgia, Texas and Connecticut followed; all having seen 66% of their 90+ day delinquent inventory participate in some form of home retention action. Additionally, at the national level, some 53% of loans in active foreclosure had taken part in home retention initiatives.
As Graboske went on to explain further, though there has been great improvement in both seriously delinquent and active foreclosure inventories, they still remain two and three times their pre-crisis norms, respectively, with 28% of the remaining inventory located in just three states: Florida, New York and New Jersey.
“Of these three states, Florida has seen the most improvement, with a 37% decline in inventory over the last year, and a 63% drop over the last two years,” Graboske said. “On the other hand, low foreclosure completion rates in New York and New Jersey have contributed to lingering inventory in those states. Looking at pipeline ratios – the length of time it would take to work through the backlog at the current rate of foreclosure completions – we see New York and New Jersey with nearly 13 and nine years of inventory, respectively. Even though Florida peaked with 20% of the entire state being 90 or more days past due, its pipeline ratio was never longer than 10 years and is currently the lowest among all the judicial foreclosure states at just under three years. Compare that to Washington, D.C., which uses a non- judicial foreclosure process and a comparatively very small backlog inventory, yet still has a pipeline of over 43 years, primarily due to extremely low foreclosure sales volume there.”