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I N D U S T R Y I N S I G H T / J K H U E Y , C M B
Do you know the "real delinquency" of your portfolio? Servicers
typically refer to their delinquency stats as 30, 60, or 90+ days
delinquent, foreclosure, bankruptcy, and REO. at's fine for
reporting purposes, but it's important to understand the aging of
those stats to effectively manage, identify, and mitigate risk. A loan
that is 90+ days delinquent could be less than a year behind, but it
could also be delinquent multiple years. You will typically find that the loans that are
more seriously delinquent will have more issues with the condition of the properties,
creating more risk and costs for your company.
According to Black Knight Mortgage
Monitor, as of June 2019, there were over
450,000 loans that were 90+ days delinquent
and over 250,000 properties in foreclosure.
Generally, the greater the delinquency, the
more likelihood the property will be vacant or
abandoned. While single-family vacancy rates
have been just over 1.5% on average in the U.S.,
there are over 1.4 million homes that are vacant,
according to 24/7 Wall St. Several cities exceed
5% vacancy, with some exceeding 15%, many
impacted by economic decline or coinciding
with areas where natural disasters have occurred.
So, what's going on with these properties?
Do you know if the properties in your portfolio
are occupied or vacant and maintained to protect
the value of the asset you financed? Or are they
abandoned and eyesores to a neighborhood and
in violation of local laws?
Most servicers outsource property
inspections and preservation to vendors and
expect the work to be completed in accordance
with investor guidelines or generally accepted
practices. is may be sufficient for earlier
stage delinquencies, but it's important to have
processes and controls in place to oversee
this work and to quickly identify and address
issues. You as the servicer will always be held
While the industry is pleased to see delinquency numbers down from the
crisis a decade ago, consumers and communities are still struggling.
IS THE DEFAULT CRISIS REALLY OVER?
