HOUSINGNEWS REPORT
ENCORE PERFORMANCE
In 2017 there were roughly $30 billion in RPL sales compared to $12 billion in NPL sales, and the trend has continued into 2018, with first quarter sales leaning towards RPLs by a margin of about $8 billion vs. $5 billion for NPLs. RPL buyers tend to be different types of investors than NPL buyers — they have different (longer) time horizons for their investments and different yield profiles. And the risk/reward ratio tends to also differ, which means “safer” loans like RPLs typically don’t sell at the kind of discounts that characterized NPL sales. In fact, seasoned RPLs (clean payment records for 24+ months) with high equity often sell at par or even above. But the availability of these loans — both as whole loans and in securities — has attracted interest from a variety of funds looking for longer-term investment opportunities.
RPLs kept hundreds of thousands of properties from flooding the market as distressed homes (the long-rumored “shadow inventory”), which would have further depressed home prices, and prolonged an already interminably long recovery in the housing market. As second acts go, RPL performance has been nothing short of a true American success story.
The presence of these RPLs is bringing back institutional investors to the mortgage securities market, perhaps an early sign that private capital will begin to lessen the industry’s dependence on the overwhelming amount of government funding that’s poured into mortgages over the past 10 years. And every RPL represents a borrower who was in some sort of financial distress but was able to correct course and maintain homeownership. In addition to the obvious benefit to these borrowers,
1. http://www.hopenow.com/industry-data/ HopeNow.FullReport.Updated(Feb2018).pdf
RICK SHARGA Rick Sharga , executive vice president for Carrington Mortgage Holdings, serves as the primary spokesman for Carrington and is responsible for directing public relations and communications, as well as branding and marketing strategies for all of the Carrington Companies.
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MAY 2018 | ATTOM DATA SOLUTIONS
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