The Week Ahead: Measuring National Mortgage Risk

On Monday, the American Enterprise Institute (AEI) will hold a briefing to reveal the data from its quarterly National Mortgage Risk Index (NMRI) and State Mortgage Risk Indices (SMRI). These quarterly risk indices provide an objective and transparent measure of how mortgage loans originated month by month would perform under severely stressed conditions. The researchers at AEI will analyze the riskiness of single-family mortgage originations based on data through April 2018 during this briefing.

According to the AEI, an NMRI value of 10 percent, for example, for a given set of loans indicates that 10 percent of those loans would be expected to default in a severe stress event, based on the actual performance of loans with the same risk characteristics after the financial crisis. The NMRI is published monthly utilizing a nearly complete census of loan-level data for loans guaranteed by Fannie Mae, Freddie Mac, FHA, VA, and Rural Housing.  These same Agency data are also used to track loan volume and other characteristics.

“The multiyear surge in home prices, particularly for entry-level homebuyers continues unabated and is fueled by high-risk mortgages guaranteed by taxpayers,” said Edward Pinto, Co-director of the AEI’s Center on Housing Markets and Finance.  “We see no halt to this trend so long as FHA, the GSEs, and the VA continue offering easy mortgage credit terms which keep demand well in excess of supply.”

Here’s what else is happening in The Week Ahead:

• Pending Home Sales Index, Monday, 10 a.m. EST
• Freddie Mac Q2 Results, Tuesday, 8 a.m. EST
• S&P CoreLogic Case-Shiller HPI, Tuesday, 9 a.m., EST
• Construction Spending Report, Wednesday, 10 a.m. EST
• Census Bureau Jobs Report, Friday, 8.30 a.m. EST

Learn more about the latest housing trends:

A Snapshot of the National Housing Market

Construction Spending on the Rise

Growth in Construction Jobs May Ease Inventory Shortage