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» VISIT US ONLINE @ DSNEWS.COM 7 A look at facts you didn't know you couldn't live without. Compiled by the DS News Staff TransUnion's 2018 consumer credit forecast released in December 2017 predicted that the 2018 mortgage industry will include three big trends: declining serious mortgage delinquency rates, rising interest rates and less refinancing, and a comeback for home equity line of credit. According to a December 2017 Zillow report entitled "Rising Single-Family Rentals Dampening Home Sales," the number of single-family rental homes grew by over 5 million between 2006 and 2017. JPMORGAN CHASE EXAMINES MORTGAGE MODIFICATION PROGRAMS INSIDE THE JOURNAL // MOVERS & SHAKERS // ON THE WEB // THE APP SPECTRUM TAKE A LOOK INSIDE THE NUMBERS D ATA B I T S PAGE 97 25 WOMEN OF LAW Source: HSH.com Home Price Recovery Index, Q3 2017 10 METRO AREAS THAT HAVE RECOVERED THE LEAST SINCE THE GREAT RECESSION 10 METROS AREAS THAT HAVE RECOVERED THE MOST SINCE THE GREAT RECESSION BAKERSFIELD, CA 32.70% LAS VEGAS-HENDERSON-PARADISE, NV 30.21% STOCKTON-LODI, CA 24.57% CAMDEN, NJ 22.88% NEW HAVEN-MILFORD, CT 22.31% CAPE CORAL-FORT MYERS, FL 21.74% FRESNO, CA 21.70% BRIDGEPORT-STAMFORD-NORWALK, CT 20.11% TUCSON, AZ 17.22% ELGIN, IL 16.59% DENVER-AURORA-LAKEWOOD, CO 72.23% AUSTIN-ROUND ROCK, TX 61.83% DALLAS-PLANO-IRVING, TX 61.07% SAN FRANCISCO-REDWOOD CITY-SOUTH SAN FRANCISCO, CA 53.09% FORT WORTH-ARLINGTON, TX 49.50% HOUSTON-THE WOODLANDS-SUGAR LAND, TX 47.99% NASHVILLE-DAVIDSON-MURRFEESBORO-FRANKLIN, TN 43.11% SAN ANTONIO-NEW BRAUNFELS, TX 35.87% BUFFALO-CHEEKTOWAGA-NIAGARA FALLS, NY 35.11% PITTSBURGH, PA 31.75% METRO NAME AMOUNT ABOVE PEAK METRO NAME AMOUNT ABOVE PEAK A new JPMorgan Chase report analyzes the various mortgage modification programs that were instituted to help mitigate the damages of the financial crisis, and what they meant for the borrowers who made use of them. JPMorgan Chase's report sampled from 1 million Chase mortgage customers who received a modification, creating a data asset of 450,000 de-identified modification recipients. ese borrowers all fit three criteria: 1) they received a modification from the Federal Government's Home Affordable Modification Program (HAMP), one of the GSEs, or a Chase proprietary modification program; 2) the modification happened between July 2009 and June 2015; and 3) it was their first mortgage modification. Chase found that "borrowers with similar payment burdens (as measured by premodification mortgage payment-to-income ratio, or PTI) received considerably different payment reductions, depending on the modification they received." Borrowers with a mortgage PTI above 50 percent doubled the amount of payment reduction they received from HAMP as opposed to the GSE program—a -55 percent HAMP reduction versus -27 percent under the GSEs. On the other end of the spectrum, borrowers with a low mortgage PTI benefited much less from HAMP. e GSE program granted a -25 percent payment reduction for these borrowers, compared to only -8 percent for HAMP. According to Chase's report, a little can go a long way: the report found that a mortgage payment deduction of only 10 percent could decrease the default rate by 22 percent. e report also discovered that most defaults by "underwater" borrowers were likely not "strategic defaults"—in other words, the borrowers weren't realizing they were underwater and deciding simply to try and cut their losses. "ere was no difference between the post-modification default rates of borrowers who received principal plus payment reduction and borrowers who received only payment reduction," according to Chase. Instead, by far the driving factor for defaults was found to be sudden income loss. e Chase report found a pattern of drops in income being followed closely by a default. at's not surprising, but it does further clarify why many borrowers wind up defaulting. Chase's report says, "is pattern held regardless of premodification mortgage PTI or loan-to-value (LTV) ratio, suggesting that it was an income shock rather than a high payment burden or negative home equity that triggered default." Chase also found that underwater borrowers didn't change their consumption habits whether they received a mortgage principal reduction or not. "ere was no difference in the post-modification credit card spending of borrowers who received principal plus payment reduction and borrowers who received only payment reduction relative to their spending 12 months before modification," said Chase. LAURA JOHNSON Senior Counsel, Office of Regulations, Consumer Finance Protection Bureau

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