New Delinquencies at Six-Year Low -LPS

by devteam May 7th, 2013 | Share

In yet another indication thatrnthe housing market is stabilizing, Lender Processing Services (LPS) said todayrnthat new problem loan rates have fallen below 1 percent for the first time inrnsix years.  Loans that were seriouslyrndelinquent in March but were current six months earlier now represent 0.84rnpercent of mortgages, a rate LPS said is approaching pre-crisis levels.  In the 2000-2004 period the rate was 0.55rnpercent. </p

LPS Senior Vice President HerbrnBlecher said that there has always been a clear correlation between high levelsrnof negative equity and new problem loan rates.  rn”Lookingrnat the March data, we see that borrowers with equity are actually outperforming</bthe national average — at 0.6 percent, this group is quite close to pre-crisisrnnorms. The further underwater a borrower gets, the higher those problem ratesrnrise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent arernactually defaulting at more than twice the national average. For those 50rnpercent or more underwater, we see new problem rates of 4 percent.<br /<br /"Still, the overall equity trend has been a very positive one,"rnBlecher continued. "LPS' latest data shows that the share of loans withrnLTVs greater than 100 percent has fallen 41 percent from a year ago. In total,rnthere were approximately 9 million such loans, or about 18 percent of activernmortgages. Some states, including the so-called 'sand states' (Arizona,rnFlorida, Nevada and California), are still well above the national level, at anrnaverage 28 percent, but they, too, have seen improvement over the last year,rnwith negative equity dropping over 40 percent across those four states sincernJanuary 2012.”</p

Asrnreported when LPS first released early numbers from its Mortgage Monitor reportrnlast month, the U.S. delinquency rate in March was 6.59 percent, down 3.13rnpercent from February and the national foreclosure inventory was 3.37 percent,rn0.41 percent lower than in the previous month. rnThe foreclosure inventory reflects mortgages that are in some stage ofrnthe foreclosure process.   Foreclosurernstarts were down 8.2 percent month over month, while foreclosure sales rosern10.1 percent. </p

LPSrnsaid that the recent passage of the state’s Homeowner Bill of Rights appears tornhave considerably slowed the foreclosure sale process in California.  In Q1 2013, foreclosure sales outside ofrnCalifornia increased 13 percent from Q4 2012, whereas in California they fellrn35 percent during that same period.   Thernlaw does not seem to have had a similar effect on the state’s foreclosurernstarts which, while down significantly from 2012 levels, are in line with thernrest of the nation’s decline in that area following the attorneys generalrnmortgage settlement and FHA modification initiatives.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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