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The April 2015 First-Time Buyer Mortgage Risk Index for Agency loans increased by nearly a full percentage point year-over-year up to 15.28 percent, indicating that those mortgage loans are moving deeper into the high-risk category, according to data released this week by the American Enterprise Institute's International Center on Housing Risk. The Agency index for first-time buyers in April was 6 and a half percentage points higher than the index for repeat buyers.
Risk layering is largely responsible for the increase in risk on mortgage loans taken out by first-time buyers. Seventy percent of first-time mortgage buyers in April 2015 had a combined LTV ratio of 95 percent or more and 97 percent of them had a 30-year term. Without substantial home price appreciation, the low down payment and slow amortization makes it likely that these first-time buyers will have very little equity in their homes for many years.
Freddie Mac has sold its third bundle of seriously delinquent single-family mortgage loans of 2015 via auction, according to an announcement from Freddie Mac on Tuesday afternoon. The winning bidder was LSF9 Mortgage Holdings, LLC. The sale included 1,052 non-performing loans serviced by Ocwen Financial with an aggregate unpaid principal balance of 201 million dollars. The loans were offered for sale in a single pool. The transaction is expected to close in July.
