Mortgage delinquency woes
According to The November Mortgage Monitor report released by Lender Processing Services, Inc. (LPS) shows signs of temporary improvement, but a sharp worsening as well. At the end of November 2011, there were nearly 25 percent less delinquencies than the January 2010 peak, revealing a trend of fewer loans becoming delinquent, a trend that dominated 2012 and the beginning of 2011. The trend has come to an end.
New problem loans that are seriously delinquent (90+ days late) as of the end of November (that had been kept current six months prior) have not improved significantly in the last year. LPS said in a statement, “This degree of stagnation indicates that while the situation is not getting markedly worse, it is not improving either, and inventories of troubled loans remain significantly higher than pre-crisis levels across the board.”
As of November, the total loan delinquency rate hit 8.15 percent, up 2.7 percent from the month prior, and the total foreclosure pre-sale inventory rate is 4.16 percent, up 3.0 percent from October. Florida, Nevada, New Jersey, Illinois and Mississippi have the highest percentage of delinquent mortgages while North Dakota, South Dakota, Montana, Alaska and Wyoming have the lowest percentage of delinquent loans.
Why the sharp drop?
The November mortgage performance data also showed both new and repeat foreclosure starts dropped sharply in November, down nearly a third from October. LPS reports that “As late-stage delinquencies in the pipeline still number close to 2 million, the sharp drop is more indicative of the impact of ongoing document reviews, additional state legislation and new regulatory requirements rather than a shift in trend.”
The silver lining, however, is prepayment activity, a key indicator of refinances, which remained strong after months of growth prior. LPS categorizes the prepayment activity levels as strong despite October origination data dropping 12 percent from September, down 21 percent over the year and down 30 percent from 2009.