Freddie Mac Oks Appraisal Alternative For Some Mortgages

[Deleted member 130081]

I won't speak for Tim, but the answer is 75+ years of residential mortgage lending history

K. I have a source that says the majority of loans that default, do so in the first year. My source is not as good as I would like though, so I was hoping for a better one.

 

[gregb]

Does your source stating the majority of loans default in first year perhaps cover the period where subprime loans were made in an abundance?

 

[Deleted member 130081]

I won't speak for Tim, but the answer is 75+ years of residential mortgage lending history

K. I have a source that says the majority of loans that default, do so in the first year. My source is not as good as I would like though, so I was hoping for a better one.

Does your source stating the majority of loans default in first year perhaps cover the period where subprime loans were made in an abundance?

Good question.

 

[timd354]

I am curious where you got the 3-6 year default peak stat from?

I work for a mortgage insurer and we constantly track and analyze default rates by just about every metric you could think of and we spend a lot of time analyzing the life cycle of mortgage loans and default rates. We make it our buisiness to know exactly when the default rates are likely to peak over the loan cycle since we receive claims for defaulted loans that we insure and we needed to appropriately model the reserves that we need to hold against against future expected losses and we need to be properly price our insurance premiums to reflect the risk. BTW, I just spoke to one of my modelers and I was slightly off with my 3-6 years peak for defaults on 30 year mortgages, he thinks the peak is in years 3 - 7 based on the data he has analyzed (which is a heck of a lot of data)

BTW, there is loads of loan performance data that can be downloaded free from both GSE's and Ginnie Mae...anyone with the skill and inclination can do an analysis of this data...although it takes quite a powerful computer and an ability to deal with SAS as the amount of data in the datasets is just too large for typical spreadsheet programs like Excel to handle.

 

[timd354]

K. I have a source that says the majority of loans that default, do so in the first year. My source is not as good as I would like though, so I was hoping for a better one.


Good question.

It is possible that I he was he is referring to subprime loans from the the peak bubble/mortgage fraud years. There is not a chance that most loans default in year 1 for typical A-paper mortgage (GSE) mortgage loans....the data simply show that the default rate in year 1 is extremely low for a typical GSE mortgage loan

 

[gregb]

Some interesting Freddie data-

http://www.freddiemac.com/research/pdf/summary_statistics.pdf

 

[timd354]

Some interesting Freddie data-

http://www.freddiemac.com/research/pdf/summary_statistics.pdf

Both GSE's, Ginnie Mae, the Fed and others publish or make huge amounts of loan performance data available.

 

[Deleted member 130081]

I work for a mortgage insurer and we constantly track and analyze default rates by just about every metric you could think of and we spend a lot of time analyzing the life cycle of mortgage loans and default rates and know exactly when the default rates are likely to peak over the loan cycle as we receive claims for defaulted loans that we insure and we needed to appropriately model reserves that we need to hold against against future expected losses and properly price our insurance premiums. BTW, I just spoke to one of my modelers and I was slightly off with my 3-6 years peak for defaults on 30 year mortgages, he thinks the peak is in years 2 - 5 based on the data he has analyzed (which is a a heck of a lot of data)

BTW, there is loads of loan performance data that can be downloaded free from both GSE's and Ginnie Mae...anyone with the skill and inclination can do an analysis of this data...although it takes quite a powerful computer and an ability to deal with SAS as the amount of data in the datasets is just too large for typical spreadsheet programs like Excel to handle.

Sounds good and much better. Thanks!

 

[Deleted member 130081]

It is possible that I he was he is referring to subprime loans from the the peak bubble/mortgage fraud years. There is not a chance that most loans default in year 1 for typical A-paper mortgage (GSE) mortgage loans....the data simply show that the default rate in year 1 is extremely low for a typical GSE mortgage loan

Yes, It is likely the timeframe was during the bubble years.

 

[timd354]

Sounds good and much better. Thanks!

No problem, I worked as an independent fee appraiser in the past and I understand that the typical fee appraiser just does not have the same access to some of the data that we are able to see on this side of the business (which is not their fault). I also don't know any residential fee appraisers who work 30 feet from a bunch of data analysts/quants who spend all day analyzing this type of data, lol.