Overall residential loan performance appears to have remained steady. Yet, in spite of some moderate decline in the dollar volume of non-performing loans, banks still hold tens of billions of dollars in defaulting debt, with much of it making it all the way to the nonaccrual stage.
Let’s dive into the latest bank data from Q1 to see exactly what is going on…
Banks Hold Over $45B First Position Non-Performing Residential Mortgages
US banks reported over $16B in first mortgages on 1-4 family properties which are in the 30-89 day late stage which is down slightly from the final three months of Q4.
However, many of those who are falling into default are not finding help or able to get out of it.
Already ahead of those in the pipeline are around $16.6B first position nonaccrual loans on 1-4 family residences as well as almost $13B in 90 day plus late loans, which have not yet been deemed nonaccrual.
Residential REOs
667 banks reported holding residential REO at the end of the first quarter this year, down by about 20 from the previous quarter.
At $742M, this is slightly lower than in the previous quarter, and still a small percentage of the total volume of distressed residential loans being reported.
High housing prices have likely helped minimize the value of loans in this bucket.
Non-Performing Residential Loans
The largest percentage non-performing residential first position mortgage loans is now in the newly late category.
As of Q1 the distribution of non-performing first mortgage liens being reported includes:
- $16.2B in 30-89 day late loans
- $13B in 90 day plus late and still accruing loans
- $16.6B in non-accrual loans
Discover the 3,000 plus banks holding these non-performing loans inside BankProspector now.
Junior Liens
At the end of the first quarter of 2024 there were over $4.5B in nonaccrual stage revolving lines of credit, up again from the previous quarter, and more than double the dollar value than last year.
Additionally, there were around $1.5B in newly delinquent HELOCs behind those as well as close to $168M in 90+ day late home equity lines of credit.
Defaults on revolving credit lines (HELOCs) continue to be far higher than on fixed second mortgage liens.
Dive into the BankProspector dashboard to find out which banks are reporting the most distressed residential junior lien loans and HELOCS.
Looking Ahead
Bank data from the first quarter shows the residential loan market steady, with minor improvements.
More loans seem to be ending up in the later stages of default. Though, with two thirds of middle class Americans reporting that they are in financial hardship in a recent poll, it shouldn’t be surprising if new defaults spike again later this year. About 46% of those surveyed say they do not even have $500 saved for emergencies.
At the same time, high housing prices and appetite for real estate investments continue to make this a strong and profitable sector.
Log in now to see which banks are currently holding the most distressed loans…
