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What happened to the fallen angels from the Great Recession?
Michele Raneri Experian
#vision2014
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Reflection on the Great Recession
Definitions
Analysis
Targeting
Agenda
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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?
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Boomerang Buyers are mortgage borrowers who have
foreclosed or short sold and have since opened a
subsequent mortgage
What are boomerang buyers?
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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
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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
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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+
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Data analysis
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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
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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+
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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 Performance Window
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
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…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
2001-2007 Performance Window
2007-2013 Performance Window
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Analysis design Focus on post-recession
2001 2007 2013 2012
Post-recession
Performance Window
Timeframes evaluated: 2001-2007 vs. 2007-2013
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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
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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
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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%
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How are Boomerang buyers paying debts now?
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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%
Auto Bankcard Retail Mortgage
Owner Occupied Second Home Investor US Avg
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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%
Auto Bankcard Retail Mortgage
Owner Occupied Second Home Investor US Avg
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%
Auto Bankcard Retail Mortgage
Boomerang Non-Boomerang US Avg
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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
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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
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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%
Auto Bankcard Retail Mortgage
Owner Occupied Second Home Investor US Avg
1.7%
3.5% 2.8%
3.7%
2.8%
7.1%
3.7% 3.6%
0%
2%
4%
6%
8%
Auto Bankcard Retail Mortgage
Boomerang US Avg
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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%
Auto Bankcard Retail Mortgage
Owner Occupied Second Home Investor US Avg
0.5% 1.8% 1.0%
1.8%
2.8%
7.1%
3.7% 3.6%
0%
2%
4%
6%
8%
Auto Bankcard Retail Mortgage
Boomerang US Avg
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Why is this important to your business?
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Understand the fallen angel
FALLEN ANGELS
Credit Savvy
Higher VantageScores®
Complex Performance
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VantageScore® 3.0
Premier AttributesSM
Strategic Default AttributesSM
Sophisticated segmentation
New suite of boomerang buyer attributes
How to identify fallen angels
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For additional information, please contact:
[email protected] | Twitter Handle: MLRaneri
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