Wall Street’s foray back into lending to homeowners with spotty credit isn’t looking great during the coronavirus pandemic.
It’s still early days, but delinquencies on residential mortgages bundled into private bond deals, or without government backing, have shot up to about 18% as of July from a low of about 4% in January, according to Goldman Sachs.
That’s a dip from a recent high of more than 20%.
The Goldman chart breaks out the performance of loans in “non-QM” bond deals from those pegged as “prime,” a category that unsurprisingly has reported far lower delinquencies of 30-days or more.
Prime borrowers typically have credit scores of 670 or higher, with those in the subprime category closer to an 580 to 669 range, according to Experian, a credit reporting bureau.
In Wall Street parlance, “non-QM”