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LPS’ March Mortgage Monitor: New Problem Loan Rates Hit Six-Year Low; Negative Equity Drops 41 Percent Year-Over-Year
JACKSONVILLE, FL (May 6, 2013) The March Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) found that new problem loan rates (seriously delinquent mortgages that were current six months ago) have fallen below 1 percent for the first time since 2007. At 0.84 percent, the March new problem loan rate is approaching pre-crisis levels, and nearing the conditions of 2000-2004 when the rate averaged 0.55 percent. However, as LPS Applied Analytics Senior Vice President Herb Blecher explained, a borrower’s equity position is still a key indicator of his or her propensity to default.
“There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” Blecher said. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average — at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent are actually defaulting at more than twice the national average. For those 50 percent or more underwater, we see new problem rates of 4 percent.
“Still, the overall equity trend has been a very positive one,” Blecher continued. “LPS’ latest data shows that the share of loans with LTVs greater than 100 percent has fallen 41 percent from a year ago. In total, there were approximately 9 million such loans, or about 18 percent of active mortgages. Some states, including the so-called ‘sand states’ (Arizona, Florida, Nevada and California), are still well above the national level, at an average 28 percent, but they, too, have seen improvement over the last year, with negative equity dropping over 40 percent across those four states since January 2012.”
The March data also showed that on the national level, foreclosure starts were down 8.2 percent month over month, while foreclosure sales rose 10.1 percent. LPS looked more specifically at that situation in California, where the recent passage of the Homeowner Bill of Rights (HBoR) appears to have slowed down the foreclosure sale process considerably. In Q1 2013, foreclosure sales nationally (excluding California) increased 13 percent from Q4 2012, whereas in California they fell 35 percent during that same period. However, the HBoR does not seem to have had a similar effect on the state’s foreclosure starts which, while down significantly from 2012 levels, are in line with the rest of the nation’s decline in referral activity following the attorneys general mortgage settlement and FHA modification initiatives.
As reported in LPS’ First Look release, other key results from LPS’ latest Mortgage Monitor report include:
Total U.S. loan delinquency rate: 6.59%
Month-over-month change in delinquency rate: -3.13%
Total U.S. foreclosure presale inventory rate: 3.37%
Month-over-month change in foreclosure pre-sale inventory rate: -0.41%
States with highest percentage of non-current* loans: FL, NJ, MS, NV, NY
States with the lowest percentage of non-current* loans: MT, AK, WY, SD, ND
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets.
To view the Mortgage Monitor Snapshot, LPS’ new video version of the Mortgage Monitor, go to http://www.lpsvcs.com/LPSCorporateInformation/MultimediaLibrary/Pages/Video-Library.aspx?ListName=Video&ItemName=MMmarch1-3_1.wmv
About the Mortgage Monitor
LPS manages the nation’s leading repository of loan-level residential mortgage data and performance information on nearly 40 million loans across the spectrum of credit products. The company’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for LPS’ monthly Mortgage Monitor Report. To review the full report, visit http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/Pages/Mortgage-Monitor.aspx
About Lender Processing Services
Lender Processing Services (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation’s top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements, and mitigate risk.
These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS’ servicing solutions include MSP, the industry’s leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries.
LPS is headquartered in Jacksonville, Fla., and employs approximately 8,000 professionals. The company is ranked on the Fortune 1000 as the 877th largest American company in 2012. For more information, please visit www.lpsvcs.com.