Chart of the Week
Every Friday, MBA's Chart of the Week provides commentary and analysis on a topic of interest for the industry. This comes from variety of data sources, including proprietary data from MBA's own surveys and studies, as well as from government agencies and other reliable sources of mortgage, housing, and economic data.
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Current Chart of the Week

A new measure of GSE-eligible credit risk was recently released by the Smith Enterprise Risk Consortium (SERC) at the University of Maryland’s Robert H. Smith School of Business. The SERC Mortgage Credit Risk Index (MCRI) measures the default risk for every loan aggregated to each quarter for loans sold to Freddie Mac and Fannie Mae. Higher scores signify greater credit risk with every 40 points of MCRI score doubling the odds of default. The MCRI ranges between 300 and 900.
Highlights:
- Credit risk of GSE-eligible mortgages remains low with a SERC MCRI score of 547 for loans originated in the second quarter of 2024 compared with the long-term average SERC MCRI score of 556 (higher MCRI = higher credit risk).
- Credit risk overall has deteriorated by about 30 score points since bottoming out in the first quarter of 2021 but has remained stable in recent quarters.
- On a year-over-year basis, credit risk rose slightly (4 MCRI score points) due largely to changes in the composition of risk factors such as the number of borrowers and number of units, among others.
- The percentage of loans considered to be the highest credit risk according to SERC MRRI remained at historically low levels, suggesting limited evidence of excessive concentrations of adverse risk attributes among borrowers.
- Credit risk of loans sold by the largest GSE originators was relatively flat while credit risk improved slightly for other lenders in Q2 2024 relative to the previous quarter.
- Similar results for credit risk of loans serviced by the largest GSE mortgage servicers relative to other servicers were observed in Q2 2024.
The tool can be used by originators, servicers, PMI companies, credit investors and regulators as an indicator of the intrinsic credit risk of quarterly originations based on underwriting conditions and economic performance of loans over the last 3-5 years. The index does not reflect an actual level of default risk but provides a highly accurate measure of relative credit risk quarter-over-quarter. As such it could be used to guide mortgage and servicing operations on staffing, QC, repurchase activity, process improvement, among other critical mortgage production and loan servicing activities.
A companion index to MCRA, the Mortgage Redtail Risk Index is also available and tracks the degree of risk layering or potential adverse selection of loans sold to the GSEs. While MCRI provides an assessment of the overall credit risk of new loans being originated, the MRRI provides an estimate of the changes in the share of new originations with the highest combination of risk factors. Loan combinations of riskiest attributes as a percentage of Q2 2024 originations remained at historically low levels indicating that concentrations of adverse risk attributes remain at relatively muted levels.
To download a copy of the report, please visit MBA’s website here. For more information on the SERC MCRI and MRRI indexes, please visit the SERC website.
- Cliff Rossi ([email protected]); Mary Bittle Teer-Koenick ([email protected]); Mike Fratantoni ([email protected]); Joel Kan ([email protected])