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

- High-LTV (>95 percent) Q3 originations up 20 percent from last year vs. 13 percent increase in overall purchase market

- Despite reintroduction of high-LTV GSE products, they make up less than 3 percent of 2015 YTD high-LTV originations

- Distressed sales down 13 percent from last year; have dropped on an annual basis for 42 consecutive months

- Cash share of purchases at lowest level since Q3 2008; cash share of condos below 50 percent for first time since 2010

Dec 07, 2015, 09:00 ET from Black Knight Financial Services, Inc.

JACKSONVILLE, Fla., Dec. 7, 2015 /PRNewswire/ -- 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."

Leveraging the Black Knight Home Price Index, this month's Mortgage Monitor also found that 2015 residential home sales to date are up 4 percent from last year, with traditional sales rising 7 percent. Distressed sales – identified as REO or short sale transactions – have declined by 13 percent from last year and have now dropped on an annual basis in 42 consecutive months, hitting a post-crisis low in July at 8.8 percent, the lowest level since 2007. The cash share of overall purchase transactions has likewise fallen to its lowest level since Q3 2008. For single-family residences, cash sales made up 28 percent of all Q3 purchases, down from 32 percent last year and 43 percent at the peak in 2012. The second quarter of 2015 saw cash sales on condominiums slip below 50 percent of purchases, ending nearly five consecutive years of over half of all U.S. condominium purchases coming from cash sales. However, even though the cash share of condominium sales is falling, it's still twice the rate seen in 2005 and 2006.

As of September, the U.S. has now experienced 41 consecutive months of annual home price appreciation (HPA). Colorado stands out among all states with nearly 11 percent annual HPA, leading the country in annual home price appreciation for the 10th consecutive month.  Home prices in Colorado are now 19 percent above their 2006 prior peak levels. North Dakota – fueled by the oil boom there – leads the nation in terms of growth over pre-crisis peaks, with home prices 31 percent above 2006 levels. Missouri is the only state that saw an annual home price decline in September, with home prices in the state down 1.9 percent from last year, driven primarily by a decline in the St. Louis metro area. Declines in St. Louis were most pronounced on homes valued in the high end (down 7 percent) and the low end (down 5 percent), with a metro area average decline of 4 percent.

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

Total U.S. loan delinquency rate:


Month-over-month change in delinquency rate:


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


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


States with highest percentage of non-current* loans: 


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


States with highest percentage of seriously delinquent** loans:


*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 & Analytics division of Black Knight Financial Services manages the nation's leading repository of loan-level residential mortgage data and performance information on the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 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:

About Black Knight Financial Services, Inc.  Black Knight Financial Services, Inc. (NYSE: BKFS), a Fidelity National Financial (NYSE: FNF) company, is a 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 a 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

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SOURCE Black Knight Financial Services, Inc.