Performance Report: Non-QM and Second Lien Mortgages, September 2025

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Quick Insights

State-Level Delinquency: Regional Gaps Widen

• National delinquency rates remain near historic lows, only modestly above 2022–2023 record levels.

• Northeast/NY Tri-State shows the strongest improvement as legacy judicial foreclosures resolve.

• TX/OK/LA and FL/GA/SC regions report the weakest performance nationwide, with both sustaining elevated YoY increases.

Non-QM: Minimal Recovery After August Spike

• Overall Impairments fell 3 bps MoM—recovering only 10% of August’s surge, one of the smallest rebounds on record.

• First-Time New Impairments remain above July levels, signaling an end to mid-year improvement.

• Cure and Made Payment rates recovered roughly two-thirds of August’s increase.

Second Liens: Seasonality Drives CES, HELOCs Remain Steady

• Closed-End Seconds (CES): Impairments rose across all regions except California, led by FL/GA/SC. Increases remain driven by loan seasoning rather than credit deterioration.

• HELOCs: 30+ Impairments declined in September even as 60+ rose modestly. Cure rates remain the highest among any mortgage product, while charge-offs have fallen to just 0.3 CDR.