The hottest Credit Risk Substack posts right now

And their main takeaways
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3. The Cause of and Solution to all of Life's Problems

Arpitrage • 548 implied HN points • 23 Feb 26
đź’° Finance Credit Risk
  1. AI and richer data can meaningfully improve credit scoring and underwriting by uncovering low-risk borrowers traditional models miss and by using unstructured inputs like digital footprints and text.
  2. More powerful, complex models introduce new risks: they can worsen fairness across groups, be brittle to regime shifts, enable adversarial attacks or coordinated runs, and create competitive arms races and herding that amplify systemic risk.
  3. Managing these dangers requires verification and simpler hybrid or explainable rules, active monitoring (often with AI itself), and more documentation, validation, and regulatory effort because system-wide feedbacks and incentives will shift.

Fannie and Freddie: Single Family Delinquency Rate Increased in January

CalculatedRisk Newsletter • 191 implied HN points • 26 Feb 26
đź’° Finance Credit Risk
  1. Single-family serious delinquency rates for Freddie and Fannie ticked up slightly in January (Freddie 0.60%, Fannie 0.59%) but remain very low and at or below pre-pandemic levels.
  2. Fannie Mae’s multi-family delinquency rate declined in the latest report but is still near the elevated levels seen during the housing bust.
  3. Serious delinquencies are concentrated in older bubble-era vintages (2004 and earlier, 2005–2008), while loans originated from 2009–2025 show much lower delinquency rates; the report also counts loans in forbearance as delinquent even though they aren’t sent to credit bureaus.

Q4 Update: Delinquencies, Foreclosures and REO

CalculatedRisk Newsletter • 62 implied HN points • 03 Mar 26
đź’° Finance Credit Risk
  1. Delinquencies, foreclosures, and the dollar value of REO properties have risen year‑over‑year but remain low by historical standards.
  2. Solid mortgage underwriting, widespread homeowner equity, and mostly fixed low rates make a large wave of foreclosures and cascading price declines unlikely.
  3. Foreclosure starts and inventory increases warrant monitoring, but many borrowers can sell or restructure loans, so the overall situation looks manageable rather than crisis‑level.

Fannie and Freddie: Single Family Delinquency Rate Increased in December

CalculatedRisk Newsletter • 86 implied HN points • 29 Jan 26
đź’° Finance Credit Risk
  1. Freddie Mac and Fannie Mae saw slight increases in single-family serious delinquency rates in December (Freddie 0.58%→0.59%, Fannie 0.57%→0.58%), but both remain low and at or below pre-pandemic levels.
  2. Fannie’s delinquency issues are concentrated in older loan vintages — loans from 2004–2008 show much higher serious delinquency rates (about 1.4–2.0%) while 2009–2025 vintages are low (around 0.53%).
  3. Fannie Mae’s multi-family delinquency rate is approaching housing-bust highs, and the report counts loans in forbearance as delinquent even though those loans aren’t reported to credit bureaus.

MBA: Mortgage Delinquencies Increased in Q4 2025

CalculatedRisk Newsletter • 19 implied HN points • 12 Feb 26
đź’° Finance Credit Risk
  1. Mortgage delinquencies rose in the fourth quarter of 2025 to a 4.26% rate, up about 27 basis points from the prior quarter and roughly 28 basis points year‑over‑year, while foreclosure starts held at 0.20%.
  2. Delinquencies increased across conventional, FHA, and VA loans, with FHA showing the biggest deterioration — about 11.52% delinquent and a notable jump in 90+ day delinquencies and foreclosure inventory.
  3. The rise appears linked to the expiration of pandemic-era FHA relief and uneven labor market conditions, and newer loan cohorts (2022–23) are struggling more than 2020–21 vintages, though improving FHA originations and moderating rates could help ease stress.
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Fannie Mae Multi-Family Delinquency Rate Almost to Housing Bust High

CalculatedRisk Newsletter • 71 implied HN points • 26 Dec 25
đź’° Finance Credit Risk
  1. Both Fannie Mae and Freddie Mac saw single-family serious delinquency rates rise to about 0.58% in November, a small month-over-month and year-over-year increase but still below pre-pandemic highs.
  2. Delinquency is concentrated in older loan vintages: Fannie’s 2004-and-earlier and 2005–2008 loans have much higher serious delinquency rates, while loans from 2009–2025 show very low delinquency.
  3. Fannie Mae’s multi-family delinquency rate has climbed to its highest level since the housing bust (excluding the pandemic), signaling rising stress in the multi-family sector.

A loan offer you can’t refuse

Klement on Investing • 5 implied HN points • 20 Feb 26
đź’Ľ Business Credit Risk
  1. When a company is downgraded to junk, bank loan availability falls sharply — about a 10% drop in the year after and roughly 30% cumulatively over five years.
  2. That sudden loss of bank financing pushes distressed CEOs and CFOs to seek alternatives, and the chance of mafia infiltration rises by roughly 5% after a downgrade.
  3. Financial distress is a key catalyst for organized‑crime infiltration because banks pull back when firms need money most, leaving a financing gap crime groups can exploit.

Q3 Update: Delinquencies, Foreclosures and REO

CalculatedRisk Newsletter • 43 implied HN points • 04 Dec 25
đź’° Finance Credit Risk
  1. A large wave of foreclosures is unlikely because lending standards are solid and most homeowners have substantial equity, so distressed sales shouldn’t trigger cascading price declines.
  2. Delinquencies and foreclosure activity have increased modestly year‑over‑year (30/60/90‑day delinquencies and foreclosure starts are up), but overall levels remain historically low.
  3. The recent rise is concentrated in certain loan types (notably FHA and resumed VA activity) and REO dollar values have climbed, so expect a modest uptick in foreclosures rather than a systemic crisis.

Checking in on Chinese lending to developing countries

Klement on Investing • 4 implied HN points • 29 Jan 26
đź’° Finance Credit Risk
  1. China’s net lending to developing countries has reversed since about 2019, so it now receives more in debt repayments than it issues in new loans.
  2. China remains a major financier for low-income countries, but slower Chinese growth and smaller surpluses have sharply reduced the flow of new loans.
  3. The credit quality of borrowers has deteriorated to roughly CCC+, making it more likely China will accept commodities or asset swaps and gain control of infrastructure when borrowers can’t repay.

Fannie and Freddie: Single Family Serious Delinquency Rates Increased in December

CalculatedRisk Newsletter • 14 implied HN points • 04 Feb 25
đź’° Finance Credit Risk
  1. Single-family serious delinquency rates for Fannie Mae and Freddie Mac have increased slightly in December, indicating more homeowners are struggling to keep up with mortgage payments.
  2. Fannie Mae's delinquency rate rose to 0.56% while Freddie Mac's went up to 0.59%, both of which are still lower than pre-pandemic levels.
  3. Older loans from before 2009 show higher serious delinquency, whereas more recent loans are performing better, but there are still some lingering issues from past housing bubble years.

Default and Bankruptcy: Black, white and shades of grey

Musings on Markets • 0 implied HN points • 14 Jul 11
đź’° Finance Credit Risk
  1. Default is not just about missing a payment; it can also involve lenders accepting losses to help borrowers avoid a formal default. This can include restructuring loans or adjusting payment terms.
  2. Lenders may prefer implicit default over explicit default because it allows them to avoid recognizing their mistakes in assessing credit risk. It makes the situation less transparent and allows them to delay acknowledging losses.
  3. For borrowers, sometimes it might be better to face explicit default and make necessary changes rather than stay in a cycle of implicit default, which can lead to worse problems down the line.

Quant Letter: February 2025, Week-3

The Parlour • 0 implied HN points • 19 Feb 25
đź’° Finance Credit Risk
  1. Using data from US corporate bond holdings can help predict credit risk better than traditional ratings. It means more real-time information for making investment decisions.
  2. A new investment strategy called Betting Against Bad Beta is introduced. This strategy aims to improve how investors can bet against stocks with poor performance.
  3. Machine learning is becoming more important in finance, especially for analysis and predicting risks. This technology helps make smarter investment choices.

Bond Ratings: Why, how and what next?

Musings on Markets • 0 implied HN points • 14 Oct 09
đź’° Finance Credit Risk
  1. Bond ratings help investors understand the credit risk of borrowing companies. Ratings agencies provide this information because individual investors often lack the knowledge to assess it themselves.
  2. Bond rating changes can affect market prices, but often prices react before the rating changes happen. This shows that while ratings are useful, they can be slow to reflect current risks.
  3. Though there are concerns about conflict of interest because ratings agencies are paid by the companies they rate, it's important to recognize that many factors contribute to bond performance, not just these ratings.