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The intent of the following article is to document and demonstrate methods that mortgage industry investors use to report delinquency (loan default) statistics for mortgage loans by seller.


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Mortgage Loan Delinquency Overview

A mortgage loan that is 30 to 60 days past due with no payments being made is considered to be in a delinquent or default status. Delinquent mortgage loans run a higher risk of bankruptcy or foreclosure and, from a servicing perspective, are not as profitable as loans with current payments. The investor may be unable to sell the loan on the Mortgage Secondary Market due to its delinquent status and if the investor is pooling the loan into a Mortgage Backed Security (MBS) it may result in the investor having to assign a lower grade or remove the loan from the pool all together. For these reasons mortgage industry investors track and report delinquency statistics for mortgage loans acquired from their sellers. Sellers with high delinquency ratios are sent warning letters and their loans are subject to post purchase quality control reviews. High delinquency ratios for a seller with delegated underwriting authority suggest flawed or erroneous underwriting practices and in some cases fraud.

Typically, an investor summarizes the delinquency data for the portfolio of loans originated by a seller rather than providing the seller with a detailed loan-by-loan list of the delinquent loans. The " Reporting Seller Mortgage Loan Delinquency Statistics" section of this article details steps for creating a report that an investor may use to track and report a seller's delinquency ratios. The Sample Mortgage Loan Delinquency Statistics Report in this article can be used as a model for a stand alone seller delinquency report or incorporated into a comprehensive Seller Scorecard report.


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