Vision 2014: What Happened To the Fallen Angels from the Great Recession?

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What happened to the fallen angels from the Great Recession?

Michele Raneri Experian

#vision2014

2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.

Reflection on the Great Recession

Definitions

Analysis

Targeting

Agenda


What are fallen angels?

Fallen Angels are consumers

who had unexpected default

during the Great Recession and

are now recovering, but have they

come back into grace and can

they can be trusted again?


Boomerang Buyers are mortgage borrowers who have

foreclosed or short sold and have since opened a

subsequent mortgage

What are boomerang buyers?


Reflection on the Great Recession

End recession Q1-2013 based on unemployment down below 8% from 10%

Dec 2007 Jun 2009 Jan 2013

Technical Recession Recovery Lag


Historical foreclosure rates

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Q1

79

Q1

80

Q1

81

Q1

82

Q1

83

Q1

84

Q1

85

Q1 8

6

Q1

87

Q1

88

Q1

89

Q1

90

Q1

91

Q1

92

Q1

93

Q1

94

Q1

95

Q1

96

Q1

97

Q1

98

Q1

99

Q1

00

Q1 0

1

Q1

02

Q1

03

Q1

04

Q1

05

Q1

06

Q1

07

Q1

08

Q1

09

Q1

10

Q1

11

Q1

12

Q1

13

Fo

reclo

se R

ate

(%

)

Source: Mortgage Bankers Association National Delinquency Survey


Historical number of short sales

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

20

07

Q2

20

07

Q3

20

07

Q4

20

08

Q1

2008Q

2

20

08

Q3

20

08

Q4

20

09

Q1

20

09

Q2

20

09

Q3

20

09

Q4

20

10

Q1

20

10

Q2

20

10

Q3

20

10

Q4

20

11

Q1

20

11

Q2

20

11

Q3

20

11

Q4

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

Nu

mb

er

of

Sh

ort

Sale

s

Source: Mortgage Bankers Association National Delinquency Survey Only displayed data Q207+


Data analysis


Analysis design Now compared to pre-recession

2001 2007 2013

Pre-recession

Performance Window

2006 2012

Post-recession

Performance Window

Timeframes evaluated: 2001-2007 vs. 2007-2013


Different types of buyers

At the time of foreclosure or short sale…

Owner

occupied

FIRST MORTGAGE TRADE 1

Second

home

FIRST MORTGAGE TRADES 2

Investor

FIRST MORTGAGE TRADES 3+


Rate of foreclosures that boomeranged is down 71%

2001-2007 Performance Window

2001-2007 Foreclosures Boomerangs Boomerang rate

Owner occupied 1,455,360 89,440 6.15%

Second home 171,800 68,940 40.13%

Investors 34,360 15,480 45.05%

TOTAL 1,661,520 173,860 10.46%


2007-2013 Foreclosures Boomerangs Boomerang rate

Owner occupied 5,429,420 114,100 2.10%

Second home 756,580 43,440 5.74%

Investors 567,840 45,120 7.95%

TOTAL 6,753,840 202,660 3.00%

306% 17% -71% Change


…and short sales showing a similar trend, down 68%

2001-2007 Short Sales Boomerangs Boomerang Rate

Owner occupied 62,840 7,780 12.38%

Second home 16,040 9,900 61.72%

Investors 4,060 2,760 67.98%

TOTAL 82,940 20,440 24.64%

2007-2013 Short Sales Boomerangs Boomerang Rate

Owner occupied 808,960 44,340 5.48%

Second home 209,080 28,200 13.49%

Investors 147,680 18,960 12.84%

TOTAL 1,165,720 91,500 7.85%

1,305% 348% -68% Change




Analysis design Focus on post-recession

2001 2007 2013 2012

Post-recession

Performance Window

Timeframes evaluated: 2001-2007 vs. 2007-2013


724 736

570 622 634

712

400450500550600650700750

Fallen Angels

12.4%

3.3%

VantageScore® migration of foreclosed population

625 652

539 590 598

680

400450500550600650700750

Overall

Before Event As of Event After Event

4.3%

4.3%

Foreclosure Non-Boomerang Buyer Foreclosure Boomerang Buyer

Foreclosure Non-Boomerang Buyer Foreclosure Boomerang Buyer


731 742

598 656 657

731

400450500550600650700750

Fallen Angels 1.5%

10.1%

VantageScore® migration of short sale population

655 683

568 628 626

705

400450500550600650700750

Overall

Before Event As of Event After Event

3.2%

4.4%

Short Sale Boomerang Buyer

Short Sale Non-Boomerang Buyer Short Sale Boomerang Buyer

Short Sale Non-Boomerang Buyer


Average mortgage balance comparison

$259,617 $262,794

$313,490

$279,573

$154,465 $168,517

$193,464 $181,974

Fallen Angels Subprime

Foreclosure Short Sale

Non-Boomerang

Buyer

Boomerang

Buyer

Non-Boomerang

Buyer

Boomerang

Buyer

68%

62%

56% 54%


How are Boomerang buyers paying debts now?


Boomerang buyer current delinquency rates Foreclosed population

3.0%

7.4%

4.1% 5.5%

8.4%

19.8%

7.7%

0.0% 2.8%

7.1%

3.7% 3.6% 0%

5%

10%

15%

20%

25%

Auto Bankcard Retail Mortgage

Boomerang Non-Boomerang US Avg

3.8%

7.2%

4.2% 4.4%

2.2%

6.8%

4.6% 5.6%

2.1%

8.4%

3.4%

8.5%

2.8%

7.1%

3.7% 3.6%

0%

2%

4%

6%

8%

10%


Owner Occupied Second Home Investor US Avg


Boomerang buyer current delinquency rates Short sold population

1.7%

4.6%

3.2%

1.8% 0.9%

5.0%

3.3% 2.6%

1.5%

4.5%

1.3%

4.1% 2.8%

7.1%

3.7% 3.6%

0%

2%

4%

6%

8%

10%



1.4% 4.7%

2.8% 2.5%

4.9%

15.2%

6.6%

0.0% 2.8%

7.1%

3.7% 3.6%

0%

4%

8%

12%

16%


Boomerang Non-Boomerang US Avg


Strategic defaulters

Individuals identified on the

credit file as consumers who

stopped paying on their first

mortgage while paying

perfectly on all other debts are

STRATEGIC

DEFAULTERS


Strategic defaulters returning faster

Data from 2007-2013 @ Time of Default

23.3%

8.6% 9.7%

5.8%

Foreclosure Short Sale

Boomerang Non-Boomerang

The percentage of boomerang buyer population who

were strategic defaulters at the time of their event


Strategic defaulters Current delinquency rates on foreclosed population

2.4%

3.9%

3.1%

1.9%

0.8%

3.3%

2.5%

3.5%

1.3%

2.9% 2.6%

6.7%

2.8%

7.1%

3.7%

3.6%

0%

2%

4%

6%

8%



1.7%

3.5% 2.8%

3.7%

2.8%

7.1%

3.7% 3.6%

0%

2%

4%

6%

8%


Boomerang US Avg


Strategic defaulters Current delinquency rates on short sold population

0.0% 1.9%

1.3% 0.6%

0.0%

3.3% 3.3%

0.0% 1.0% 1.4% 0.5%

2.9% 2.8%

7.1%

3.7% 3.6%

0%

2%

4%

6%

8%



0.5% 1.8% 1.0%

1.8%

2.8%

7.1%

3.7% 3.6%

0%

2%

4%

6%

8%


Boomerang US Avg


Why is this important to your business?


Understand the fallen angel

FALLEN ANGELS

Credit Savvy

Higher VantageScores®

Complex Performance


VantageScore® 3.0

Premier AttributesSM

Strategic Default AttributesSM

Sophisticated segmentation

New suite of boomerang buyer attributes

How to identify fallen angels


For additional information, please contact:

[email protected] | Twitter Handle: MLRaneri

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Vision 2014: What Happened To the Fallen Angels from the Great Recession?

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Transcript of Vision 2014: What Happened To the Fallen Angels from the Great Recession?