INDUSTRY ILLUSTRATED
WRAP YOUR HEAD AROUND THE MARKET'S LEADING INDICATORS
Default Propensity
and Loan Features
Loan Status by Feature
(2004-2008 Originations)
Loan Status3
Completed
Foreclosures
14.7%
10.0%
24.7%
4.9%
6.4%
11.3%
Prepayment Penalty
16.7%
12.5%
29.2%
5.9%
5.6%
11.5%
Higher Rate2
17.1%
13.5%
30.6%
Median or Lower Rate
Interest Rate
Hybrid or Option ARM1
No Prepayment Penalty
Prepayment Provision
Total
Fixed Rate or Standard ARM
Rate Type
Seriously
Delinquent
5.9%
6.2%
12.1%
"Hybrid or option adjustable-rate mortgage (ARM)" loans are defined
as loans with any one of the following characteristics: ARMs with interest
rate resets of less than five years, negative amortization, or interest–only
payment schedules. 2"Higher–rate" is defined as first–lien loans for which
the annual percentage rate (APR) spread was 300 basis points or more
above Treasuries of comparable maturity. 3Loan status reflects loan
performance through February 2012.
1
Source: Center for Responsible Lending
DS News tracks the latest and most relevant industry data and reports to
keep you in the know. With the industry gearing up to tackle compliance
challenges, let's take a look at the performance of some of the loan
products the new rules and regulations are designed to curtail.
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