DS News

10 The Exchange THE EXCHANGE: THE WAY FORWARD Larry Cordell, SVP, Risk Assessment, Data Analysis, and Research Group, and Xudong An, AVP, Supervision, Regulation, and Credit, both of the Federal Reserve Bank of Philadelphia, speak about foreclosure trends as borrowers continue exiting forbearance. By Eric C. Peck Prior to joining the Fed in 2007, Larry Cordell worked in the mortgage industry at Radian Group and Freddie Mac. Upon joining the Fed, Cordell was a special advisor during the financial crisis and focused on several key Federal Reserve System initiatives, including the conservatorship of Fannie Mae and Freddie Mac, the Supervisory Capital Assessment Program (SCAP), and the Comprehensive Capital Analysis and Review (CCAR) exercises. Cordell is now the SVP of the Risk Assessment, Data Analysis, and Research (RADAR) group, which he started after the financial crisis and has helped grow from two people to over 50. His team has developed key capabilities, including housing the most comprehensive collection of securities and consumer credit data on U.S. markets, building out surveillance and research capabilities in Supervision, and estimating loss models as part of the Dodd-Frank Act Stress Tests (DFAST). Cordell's research focuses on all aspects of consumer finance, loss modeling, and fixed income securities. He has also been an adjunct professor in Penn State's Master of Finance Program, teaching a course in fixed income securities. He has a Ph.D. in economics from the University of North Carolina at Chapel Hill and an undergraduate degree from St. Louis University. After spending a decade focusing on mortgages and mortgage-backed securities as a professor and consultant, Xudong (Sean) An traded in his title as tenured Professor of Finance and Endowed Professor of Real Estate at San Diego State University for an economist role at the Bank. His interests now lie in consumer finance, banking, and risk management, and he has shared his research in academic journals including the Journal of Financial Economics, the Journal of Policy Analysis and Management, and Review of Finance. An has a Ph.D. from the University of Southern California. He is an elected Fellow of the Homer Hoyt Institute, and currently serves on the editorial board of Real Estate Economics and the Journal of Real Estate Finance and Economics. Cordell and An spoke with DS News about recent housing market trends and specifically the data covered in the Philadelphia Fed's "Examining Resolution of Mortgage Forbearances and Delinquencies" report, published in January 2022. To begin, could you tell me some of the top takeaways from your recent analysis of Black Knight's data on mortgage forbearances and delinquencies? Cordell: e forbearance report says you're down to about 700,000 [in forbearance]. From our overall numbers, that's quite a drop, because at one time or another, over this whole period, about 8.4 million mortgages were in some stage of forbearance. Some of them, of course, were always performing. Now we're down to about 700,000 borrowers still in forbearance. Close to a million borrowers have come out of forbearance but are seriously delinquent. While a million sounds like a lot, about half of those are in some stage of loss mitigation, and about half of that have come out of loss mitigation. So, those are loans that are likely to be referred to foreclosure. at, in and of itself, is not high. We're talking about around 2% of mortgages in the entire industry of about 53 million mortgages. at's a pretty small percentage. So, we're not talking about something that's going to create some sort of systemic problem Get to Know Industry Executives Beyond the Boardroom We're in a very strong housing market. Many borrowers have enough equity in their homes to avoid foreclosure, and there is a huge demand for housing in the market. This will help most avoid foreclosure. Larry Cordell, SVP, Risk Assessment, Data Analysis, and Research Group, Federal Reserve Bank of Philadelphia Larry Cordell SVP, Risk Assessment, Data Analysis, and Research Group Xudong An AVP, Supervision, Regulation, and Credit, Federal Reserve Bank of Philadelphia

• Cover