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» VISIT US ONLINE @ DSNEWS.COM 25 Continuing our conversation about consumers—you mentioned that examining credit trends among homebuyers has been a focus for you. What have you learned? We see a lot of positive trends right now, including mortgage delinquencies that have come down to the lowest levels we've seen in years, write-offs becoming fewer and far between, and consumers benefiting from mortgages locked in at low-interest rates. However, there are some troubling trends as well that require vigilance. We've seen prices rising in part due to tight inventories, particularly in that entry-level segment for new homeowners that are causing consum- ers to take on higher debt-to-income ratios. We are also seeing rising interest rates that'll come into play. In 2017 we saw a decrease in first mortgages, which we think was largely because it was the year that we finally saw the long-anticipated rise in interest rates and this slowed down the refinance side. However, this also opens up opportunities on the HELOC and second mortgage side. HELOC originations have been on a steady rise since 2011, but with much tighter underwriting and much less generous terms than we used to see before e Great Reces- sion. Many lenders have eliminated or short- ened the interest-only periods, and insist on fully amortizing payments from the first draw. is reduces the risk of the payment shocks that we saw over the last four years. While subprime HELOCs are also on the rise, they still only make up less than 1-1/2 percent of the overall HELOC origination dollars, so it's a small segment. Speaking of subprime, how has this market evolved over the last few years? e subprime heyday that we saw before e Great Recession hasn't come back, and that's reassuring regarding the stability of the housing market. But on the other hand, it also means that there are otherwise credit-worthy borrowers that get shut out of homeownership. In 2017, 9 out of 10 mortgage borrowers who originated a new mortgage had a Vantage credit score 3.0 of 638 or above, which is well into the prime territory. In contrast, back in 2005, one in 10 of the new loans had a borrower credit score below 585. So we've seen the threshold for subprime borrowers to get into homeownership go up quite a bit, and that's something we would like to see a change in a responsible manner. DS News is the only publication in the country solely dedicated to providing default servicing professionals with news and content focused on their industry. SUBSCRIBE TO THE LEADER IN DEFAULT SERVICING NEWS SUBSCRIBE NOW! Call 214.525.6700 or connect with us online at DSNews.com.