Second Mortgage Monitor
The table below provides the latest update on the CalSTRS owned second mortgages generated through the previously offered 80/17 and 95/5 programs over the last several years. This table was first presented in the HLP’s mid-year report for 2011.
The information included is grouped by vintage year using data available through October 31, 2013. Payments on these “deferred seconds” are not required during the first five years after origination. (The associated first liens are fully amortized and represent 80 percent of the total amount funded for 80/17 mortgages, 95 percent for 95/5 mortgages.)
At the beginning of the second lien’s sixth year, all interest that accrued during the five year deferral period is capitalized (added to the principal balance), and the borrower is then required to make regular monthly payments until maturity. Loans that have transitioned from the deferred payment period to the required payment period are referred to as recast loans.
Second Mortgage Performance by Vintage Year, December 31, 2013
|Origination Year||Origination Qty||Origination Original Balance||Recast Year||Active Current||Active 90+ Days Del.||Active Remaining Principal Amount||Inactive Paid Off||Inactive FCL or Short Sale||Inactive Cumulative Amount Written-off|
- Origination Original Balance Total: $319,665,283
- Active Remaining Principal Amount Total: $215,895,545
- Inactive Cumulative Amount Written-off Total: $16,267,520
Data from the table is presented in the following bar chart. Each bar represents a vintage year and is labeled with the total quantity of second lien mortgage originations during the year and the percentage of loans that either defaulted, or are delinquent as of December 31, 2013. This percentage is calculated by adding the number of delinquent loans to the number of foreclosure/short-sale loans, and dividing this sum by the quantity originated during the year.
Status of Second Mortgages, December 31, 2013
The 2005 through 2007 vintages suffered greatly from having been originated at peak pricing in the housing market. The portfolio has been fortunate that this group accounts for only six percent of the Home Loan Program portfolio’s deferred second originations. The vintages from 2008 through 2011 make up 94 percent of the portfolio’s deferred second originations and continue to perform much stronger since they were originated after a significant amount of peak price depreciation had already occurred.