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“In many ways, 2013 marked an abatementrnto crisis conditions in the U.S. mortgage market,” said Herb Blecher, seniorrnvice president of Black Knight Financial Services’ Data & Analyticsrndivision. “Delinquencies neared pre-crisis levels, foreclosure inventoryrndeclined 30 percent over the year, new problem loan rates improved in bothrnjudicial and non-judicial foreclosure states, and foreclosure starts ended thernyear at the lowest level since April 2007. Despite a recent drop off, 2013 wasrnalso the best year for property sales since 2007, with totals through Novemberrnoutnumbering the full year totals for each of the prior three years. Inrnaddition, as we’ve noted before, due to stricter underwriting, 2013rnoriginations have proven to be the best-performing loans on record.</p

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At the same time, Blecher noted thatrnmortgage originations fell to the lowest levels since 2008 as higher interestrnrates seemed to have ended the refinancing wave of the last several years.  Even as rates pulled back again toward thernend of the year refinancing remained low. rnHe said that going forward opportunities for new originations will likelyrncome from looser underwriting and/or home equity lending which has shown arnsizable increase in volume since 2012.</p

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Black Knight notes that underwritingrncriteria remains very strict although most originators eased off a little inrn2013.  “Looser” standards are primarilyrnfocused on the refinancing population where average credit scores have steadilyrndeclined and loan-to-value ratios ratcheted up.   </p

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Home sales in 2013 were thernstrongest since 2007.  National homernprices also continued to improve but home values in states where a non-judicialrnforeclosure process is the norm are recovering faster than in judicial states.  Of course as prices are rising faster thernlevel of negative equity is also shrinking more rapidly in non-judicialrnstates.  </p

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“On the home price front, while nationalrnlevels rose 8.5 percent year-over-year through November 2013, we did see homernprices in judicial states generally recovering at a slower pace than theirrnnon-judicial counterparts,” Blecher said. rn “A similar situation existed withrnregard to negative equity improvement, which also occurred more slowly in thosernareas with extended foreclosure processes. With 75 percent of loans that arerneither seriously delinquent or in foreclosure being ‘underwater,’ thernresolution of these inventories in many regions (and the speed at which thatrnhas occurred) has had a pronounced effect on reducing overall negative equityrnnumbers.”  New problem loan rates also occurredrnwith greater frequency in judicial states.</p

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The December 2013 data also showed that,rneven in most states with judicial or legislative slow-downs, foreclosurernpipelines have been clearing over the last half of 2013. Massachusetts, forrnexample, has seen its pipeline ratio decline by 49 percent since June, whilernNew York and New Jersey have come down 39 and 37 percent, respectively. On thernother hand, California – which enacted its Homeowner Bill of Rights at thernstart of 2013 – has seen its pipeline ratio increase by 36 percent in the lastrnsix months. Overall, judicial states’ foreclosure inventories remain 3.5 timesrnas large as those in non-judicial states.</p

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