In this short post, we update the state of delinquencies for GNMA multi-lender cohorts, by vintage and coupon. As the Ginnie market has shifted away from bank servicers, non-bank servicers now account for more than 75% of GNMA servicing, and even higher percentages in recent-vintage cohorts.
The table below summarizes delinquencies for GN2 cohorts where outstanding balance is greater than $10 billion. The table also highlights, in red, cohorts where delinquencies are more than 85% attributable to non-bank servicers. That non-banks are servicing so many delinquencies is not surprising given the historical reluctance (or inability)of these servicers to repurchase delinquent mortgages out of pools (see our recent analysis on this here). This is contributing to an extreme overhang of non-bank–serviced delinquencies in recent-vintage GNMA cohorts.
The 60-day+ delinquencies for 2018 GN2 3.5s get honorable mention, with the non-bank delinquencies totaling 84% of all delinquencies, just below our 85% threshold. At the upper end, delinquencies in 2017 30yr 4s were 93% attributable to non-bank servicers, and they serviced nearly 90% of 2019 delinquencies across all coupons.
The delinquencies in this analysis are predominantly loans that are six-months or more delinquent and in COVID forbearance.[1] Current guidance from GNMA gives servicers the latitude to leave these loans in pools without exceeding their seriously delinquent threshold.[2] However, as noted in our previous research, several non-bank servicers have started to increase their buyout activity, driven by joint-ventures with GNMA EBO investors and combined with a premium bid for reperforming GNMA RG pools. While we saw a modest pullback in recent buyout activity from Lakeview,[3] which has been at the vanguard of the activity, the positive economics of the trade indicates that we will likely see continued increases in repurchases, with 2018-19 production premiums bearing the brunt of involuntary speed increases.
Contact us if you are interested in seeing variations on this theme. Using Edge, we can examine any loan characteristic and generate a S-curve, aging curve, or time series.
[1] Breakdown of delinquencies available on request.
[2] GNMA APM 2020-17 extended to July 31st the exemption of counting post-COVID delinquencies as part of the servicer’s Seriously Delinquent count.
[3] Lakeview repurchased 15% of seriously delinquent loans in January, down from 22% in December. Penny Mac and Carrington continued their repurchases at their recent pace.
