August 2018 Mortgage Monitor

474,000 Mortgaged Properties in FEMA-Declared Disaster Areas Resulting from Hurricane Florence; VA Loans Disproportionately Represented

• The 34 counties FEMA has declared disaster areas as a result of Hurricane Florence contain 20 percent of all mortgaged properties in North Carolina and 10 percent of those in South Carolina
• Homes in these areas tend to be more heavily leveraged than the national average, with average combined loan-to-value ratios of 63 percent as compared to the national average of 51 percent
• Just prior to Hurricane Florence, these areas also had a higher-than-average delinquency rate of 4.4 percent, as compared to the national average of 3.5 percent
• While Veterans Administration (VA) loans account for approximately 5 percent of the national market, VA loans make up 20 percent of mortgages in areas impacted by Hurricane Florence
• In the wake of Hurricanes Harvey and Irma last year, the increase in delinquency rates among VA mortgages was more than 40 percent higher than the increase among conventional loans
• If the per capita impact matches that of last year’s storms, more than 5,400 homeowners with VA loans would be among the nearly 25,000 borrowers who could become past due over the next three months, as a result of the hurricane

JACKSONVILLE, Fla. – Oct. 8, 2018 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based on data as of the end of August 2018. This month, in light of the devastating flooding experienced in North and South Carolina as a result of Hurricane Florence, ICE examined the potential mortgage-related impact that could follow. Looking at the 34 counties in those states declared disaster areas by the Federal Emergency Management Agency (FEMA) as of Sept. 28, and using last year’s hurricanes as a model, ICE'S analysis shows approximately 474,000 mortgaged properties in the impacted zone. As Ben Graboske, executive vice president of Data & Analytics division explained, if the post-storm trajectory follows that of Hurricanes Harvey and Irma, thousands of Americans affected by Hurricane Florence could become past-due in the coming months.

“Although the situation in the Carolinas continues to evolve as we speak, we are beginning to get a sense of the potential scope of the storm’s impact from a mortgage performance aspect,” said Graboske. “As those affected by the storm begin recovery efforts, recent history suggests many will have some difficulty remaining current on their mortgages. Of the nearly 1.2 million properties in the 34 counties in the Carolinas thus far declared disaster areas by FEMA, approximately 474,000 have at least one mortgage. The majority – 80 percent – of these properties are in North Carolina, and account for more than 20 percent of the homes in that state. The remainder are in South Carolina. In general, while average home prices in these areas run $100,000 below the national average, they tend to be more heavily leveraged. Nationally, the average combined loan-to-value (CLTV) ratio is 51 percent, while in these FEMA-declared areas the average is 63 percent. As a whole, the area also had a higher-than-average delinquency rate of 4.4 percent going into the storm, as compared to the national average of 3.5 percent.

“While negative equity in the affected area is limited, at just over 3.0 percent of the population, higher leverage is certainly something to monitor, particularly for borrowers who are financially impacted by the storm. That becomes even more of an issue when you consider the area’s disproportionate concentration of VA mortgages – which offer borrowers the option of up to 100 percent LTV loans and may be skewing the average CLTV higher. Nationally, VA loans make up approximately 5 percent of the market, but in this area – home to Fort Bragg, Camp Lejeune and a heavy veteran population – VA lending accounts for more than 20 percent of all mortgages. In some counties, that number surpasses 40 percent. In the wake of Hurricanes Harvey and Irma last year, the data showed the increase in the VA delinquency rate in affected areas was 40 percent higher than among conventional mortgages. If the per capita impact of Florence matches last year’s storms, more than 5,400 veteran homeowners with VA loans would be among the nearly 25,000 borrowers who could become past due over the next three months.”

As the total impact of Hurricane Florence remains to be seen, it’s important to note that one year after 2017’s hurricanes wreaked havoc on Texas, Florida and Puerto Rico, recovery is still underway. Serious hurricane-related delinquencies – those 90 or more days past due – have fallen by more than 80 percent from their peak at the start of 2018. This includes an 84 percent decline in affected areas of Florida and a 78 percent reduction in Texas. Improvement continues in Puerto Rico as well, albeit at a slower pace. Overall hurricane-related delinquencies on the island are down 85 percent from their peak, while serious delinquencies have fallen by 74 percent. Approximately 18,000 hurricane-related serious delinquencies still remain in Puerto Rico and just over 25,000 on the mainland.

As was reported in ICE’s most recent First Look news release, other key results include:

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state
**Seriously delinquent loans are those past-due 90 days or more.

Totals are extrapolated based on ICE’s loan-level database of mortgage assets.

About Mortgage Monitor

The Data & Analytics division of Black Knight manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the Black Knight HPI and Collateral Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

Black Knight’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.blackknightinc.com/data-reports/

About Black Knight

Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com.

About Mortgage Monitor

ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and ICE Valuation Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

ICE’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.icemortgagetechnology.com/resources/data-reports

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates industries to connect our customers to opportunity.

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