Black Knight's June Mortgage Monitor: Borrowers Carry Highest Level of Non-Mortgage Debt in Over 10 Years; Underwater Population Down 26 Percent Through May

- U.S. mortgage holders are carrying an average of approximately $25,000 in non-mortgage-related debt

- Student loan debt among mortgage holders at all-time high, while credit card debt remains near post-crisis lows

- 1 million fewer borrowers were underwater on their mortgages as of May than at the start of 2015

- 5.7 million homeowners may still be "locked out" of selling their homes due to equity position

Aug 03, 2015, 09:00 ET from Black Knight Financial Services, Inc.

JACKSONVILLE, Fla., Aug. 3, 2015 /PRNewswire/ -- Today, the Data and Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Mortgage Monitor Report, based on data as of the end of June 2015. By merging loan-level data from the company's industry-leading McDash mortgage performance database with Equifax ABS CRI Servicing data via the McDash Credit Module, Black Knight analyzed U.S. mortgage holders' levels of non-mortgage-related debt and found those levels are at their highest in over 10 years. As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, non-mortgage debt among U.S. mortgage holders bears close watching due to its potential impact on both the lending and housing industries.

"Mortgage lenders know exactly how much debt borrowers are carrying at the point of origination, but often lose sight from that point forward," said Graboske. "Non-mortgage debt is another key piece of the home affordability puzzle -- the more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations. What we've found is that mortgage holders today are carrying more non-mortgage debt than at any point in the past 10 years, with an average of $25,000 per borrower. That's $1,400 more on average than one year ago, and nearly $2,600 more than in 2011. The primary driver of this increase is a rise in auto-related debt, which accounted for 81 percent of the overall non-mortgage debt increase over the past four years. We also noticed a clear correlation between non-mortgage debt and borrowers inquiring about a new mortgage, with those who have recent mortgage inquiries on their credit reports carrying nearly 40 percent more debt than borrowers who do not."

Black Knight found that the student loan debt of U.S. mortgage holders is at all-time high: 15 percent of mortgage holders are carrying student loan debt, with average balances of nearly $35,000. The average student loan debt for all mortgages has more than doubled since 2006, and the share of mortgage holders carrying that debt has increased by 44 percent over that 9-year span. While the GSEs hold more than half of all mortgages with accompanying student loan debt, the situation is much more pronounced among FHA borrowers. Roughly one quarter of all active FHA loans carry student loan debt, as compared to just 13 percent of GSE loans. In fact, FHA's market share of post-crisis mortgages with student loan debt is nearly twice that of those without, suggesting that borrowers with student loan debt may be willing to trade higher payments in the form of mortgage insurance premiums for reduced down payments.

Leveraging data from the Black Knight Home Price Index, Black Knight also looked at the current state of negative equity among U.S. mortgage holders and found continuing improvement there.

"Over the first five months of 2014, we saw the number of underwater borrowers decrease by 20 percent," Graboske said. "During that same span this year, that population has dropped by nearly 26 percent to 6.1 percent of active mortgages. That's more than one million fewer borrowers in negative equity positions than there were at the start of the year, leaving just over three million remaining. In California alone, one out of every three borrowers entering the year underwater on their mortgage is no longer in a negative equity position. And while this is undoubtedly good news, some troubled areas still remain. Nearly 500,000 borrowers in Florida still find themselves underwater, and borrowers living in the bottom 20 percent of homes by price around the country make up over 50 percent of the remaining underwater population. Furthermore, when you take into account real estate agent commissions and seller-paid costs, some 5.7 million homeowners may still be 'locked out' of selling their homes due to their current equity positions. So while the improvement is clear, there is still quite some way to go."

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

Total U.S. loan delinquency rate: 

4.82%

Month-over-month change in delinquency rate: 

-2.90%

Total U.S. foreclosure pre-sale inventory rate:

1.46%

Month-over-month change in foreclosure pre-sale inventory rate:

-2.11 %

States with highest percentage of non-current* loans:

MS, NJ, LA, ME, NY

States with the lowest percentage of non-current* loans:

MT, SD, MN, CO, ND

States with highest percentage of seriously delinquent** loans:

MS, RI, LA, AL, AR

*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, Inc.  Black Knight Financial Services, Inc. (NYSE: BKFS), a Fidelity National Financial (NYSE: 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, Inc.



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