The number of mortgages classified as “reperforming” – meaning they are currently performing but were previously, at one point or another, more than 120 days delinquent and/or in some stage of foreclosure – has grown to nearly 2 million loans over the last four years, according to a recent report from Black Knight Financial Services.
Today, approximately 4% of active performing mortgages have been either 120 days or more past due or in foreclosure at some point in the past, according to the software firm’s most recent Mortgage Monitor report.
In addition to more reperforming loans (RPLs), the average length of time that an RPL has been reperforming has increased during the past four years. Today, nearly 60% of RPLs have now been reperforming for at least 24 months compared with 54% one year ago and 34% at the end of 2012, Black Knight’s data shows.
The average RPL today has been reperforming for 35 months, which has been trending upward from an average of 12 months at the end of 2010, when the population increased significantly in the wake of the federal government’s Home Affordable Modification Program (HAMP).
A record number of modifications in 2010 pushed the population above the 1 million mark.
Today, though, nearly half of the population is made up of loans brought back to performing status via loan modifications, with 30% being HAMP modifications and other forms of cures representing the remaining 23%.
Black Knight’s data also shows re-default rates within the RPL market as a whole have improved over time, as the market has become more seasoned – but significant variations in performance exist depending on how long the loan had been reperforming, how the loan was brought current, and how many prior modifications there had been on the loan, among other factors.
Although to some it might seem self-evident, the report also shows RPLs are also much less likely to prepay than non-RPL mortgages.
What’s more, loans that became reperforming through modification are much less likely to prepay than non-modified RPLs.