New REO Inventory Rises

According to Fitch Ratings, mortgage servicers have not stopped working with struggling homeowners in the post COVID-19 era to avoid defaults where possible. But as post-moratorium data begins to flow in, REO volumes mostly held steady as servicers continue to work through their post-pandemic REO inventory however new REOs increased by 14.5%. 

“While loan portfolio delinquencies for Fitch-rated bank and non-bank servicers were stable for the third consecutive quarter, the impact of four consecutive quarters of new foreclosure filings post-moratoria is now being felt in new REO volume,” said Fitch Director Richard Koch. 

REO inventory trends reflect a decrease in inventory greater than 360 days while inventory less than 179 days increased 14.5%, reflecting the resumption of active foreclosure activity during the fourth quarter of 2022. 

Bankruptcy and foreclosure filings and 60-90+ day delinquencies showed no significant change quarter over quarter for bank servicers, while non-bank servicers reported a 1% increase in new foreclosure filings. 

On the topic of loan modifications, banks and non-bank servicers reported a small decrease in loan mods quarter over quarter to 31% from 35% and 17% from 20%, respectively. Active forbearance plans for banks and non-banks reflected an increase quarter over quarter to 37% from 35% and 42% from 40%, respectively. 

“The increase in forbearance applications may be attributable to the CARES Act extension through 1Q23,” Fitch said. “Other exit strategies, such as short sales, deferments and deed-in-lieu of foreclosure account for 29% of monthly loss mitigation workout volume for non-bank servicers, an increase of 7% from the previous quarter while bank servicers reported it unchanged at 2%.” 

Among other data reported by Fitch, bank servicers reported a decrease in full-time employees for the third quarter with an average reduction of 10.5% from last quarter while non-bank servicers upstaffed by about 5% on average from the previous quarter. 

Click here to view Fitch’s report. 

Share this post :

Picture of Sasa


Biographical Info
Latest News

Unleash the Power of Knowledge

Stay in the know with our suite of email blasts
Receive the latest news

Gain Access to Exclusive Mortgage Knowledge!

Stay at the forefront of industry developments! By subscribing to MortgagePoint, you’re aligning yourself with the latest insights, updates and exclusive promotions in the mortgage industry. As an industry professional, it’s critical to stay informed and up-to-date. Don’t miss out – subscribe now!