The mortgage servicing industry is worlds away from where it was six years ago at the peak of the housing crisis, and many housing metrics have returned to their pre-crisis levels of “normal” activity—which has led many to question what will become of default servicing.
The Five Star Institute discusses the current state of the mortgage servicing industry in the context of delinquencies, defaults, and the homeownership rate in a new white paper, “U.S. Residential Mortgage Default Performance Update & Market Analysis.”
Industry experts such as Moody’s Analytics Chief Economist Mark Zandi, Trulia Chief Economist Ralph McLaughlin, Urban Institute Housing Finance Policy Center Co-Director Laurie Goodman, Collingwood Group Managing Director Tom Booker, Five Star President and CEO Ed Delgado, and Ten-X Chief Marketing Officer Rick Sharga discussed where default numbers are now compared to where they were, and also where they are headed.
“My belief and most of the economists I’ve talked to agree with this is that by next year in 2017 at some point in the year we will be back to pre-crisis normal levels of foreclosure activity,” Sharga said, predicting that there might even be an inversion in 2018.
Zandi noted, “Delinquencies are about as low as they have ever been, and new defaults aren’t too far away from record lows. These are the best of times for mortgage credit. Mortgage quality will eventually begin to weaken, but we are good year or two away from that.”
In the white paper, experts also took a look at the nation’s declining homeownership rate, which is currently at its lowest level in five decades, and whether or not it will improve in the near term.
While many analysts claim it is the millennial demographic that is the key to improving the homeownership rate, McLaughlin said he believes Gen Xers will be critical to increasing the number of homeowners in the U.S.
“If the homeownership rate were likely to be buoyed up at any point in the near future, it would be from their return into homeownership rather than millennials jumping into homeownership,” McLaughlin said.