LPS Home Price Index Shows U.S. Home Price Decline of 0.9 Percent in January; Early Data Suggests Slowing Likely in February, to 0.3 Percent Drop

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JACKSONVILLE, Fla. – April 9, 2012 – Lender Processing Services, Inc. (NYSE: LPS), a leading provider of technology, data and analytics for the mortgage and real estate industries, today announced that its LPS Applied Analytics division updated its home price index (LPS HPI) with residential sales concluded during January 2012.

LPS also announced that starting with this month’s report, results are based on an updated view that more accurately tracks price changes for non-distressed homes. In addition to foreclosure price data the LPS HPI now accounts for the impact of short sale on estimates of normal market prices. It now reports monthly discounts from market prices for these distressed sales, allowing greater accuracy for loan loss estimates. In addition, this update now includes increased geographic coverage as a result of also including FHFA HPI data.

“With proper accounting for short sales, we see two things. First, prices on normal (non-distressed) properties are doing a bit better than had been estimated before. The dramatic fall in prices after the bubble is actually closer to 26 percent, less than the 30 percent which we and others have previously reported,” said Raj Dosaj, vice president of LPS Applied Analytics. “This is due to the fact that many of the short sales appear to be the same homes that saw significant increases in values during the bubble.

“The second piece of information gleaned is that banks are getting about the same price on both short sales and foreclosure sales in areas that have high levels of distressed transactions,” Dosaj continued. “Clearly the mortgage industry has made significant efforts to put distressed properties through the short sale process as an alternative to foreclosure.”

Although most homeowners have remained current with their loans, short sales have been a relatively large part of total home sales volume after the bubble. The lack of proper accounting for short sales has exaggerated their effect on all the major HPIs, including the LPS HPI, until now. LPS computes its HPI exclusively from differences in prices that homeowners pay on their initial purchases and what they later receive when they sell.

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