Fewer borrowers are late making their house payments, according to a real-estate data firm, which credits strong employment numbers and tougher lending standards for the decline in delinquencies.
Nationally, 3.2% of jumbo mortgages were 30 days or more past due in May, a 1.1 percentage-point decline from May 2016, Calif.-based data firm CoreLogic found. The serious delinquency rate, defined as 90 days or more past due, was just 2.1%—the lowest rate in nearly a decade.
The Las Vegas metropolitan area had the highest 30-day jumbo delinquency rate in the nation in May, with 9.8% of loans with a balance of $750,000 or more delinquent. “Las Vegas was a boom/bust market, so that’s not at all a surprise,” says Sam Khater, CoreLogic’s deputy chief economist.
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The impact on your credit score “varies based on where you’re starting,” she adds, “but it’s not unusual if you default to lose 50 to 100 points.” But that doesn’t mean that delinquent borrowers will never be able to qualify for a jumbo mortgage again. Lenders of conforming loans have to comply with strict investor guidelines to sell loans on the secondary market. But jumbo lenders, many of which hold on to loans in their portfolio, have lots of discretion—even for borrowers with blips on their credit report.
“We have a set of criteria that we believe matches our risk appetite,” says Diane Morais, president of consumer and commercial banking products for Ally Bank. “Because we retain these loans on our balance sheet, more factors can come into the decision process.”
Ms. Morais says that Ally considers the cause of a delinquency or default and will take extenuating circumstances into consideration. “Was there just one late payment or an extended pattern of past-due behavior?” she says. “There is no hard-and-fast rule where I would say that under no circumstances would someone who’s had a delinquency on a jumbo loan ever be approved again.”
