Mortgage activity this summer
Echoing recent data from the Federal Housing Finance Agency, Lender Processing Services (LPS) reports in their June Mortgage Monitor report that while overall mortgage prepayment activity remains stable, despite historically low rates, the federal government’s Home Affordable Refinance Program (HARP) has seen considerable activity since the beginning of 2012.
LPS reports the total U.S. loan delinquency rate rose 3.4 percent between May and June to 7.14 percent. The total U.S. foreclosure pre-sale inventory rate fell 2.0 percent in June to 4.09 percent.
“For this month’s Mortgage Monitor, we looked at Fannie Mae and Freddie Mac [GSE] 30-year fixed-rate loans across a variety of loan-to-value ratios,” explained Herb Blecher, senior vice president, LPS Applied Analytics. “Since the beginning of this year, high loan-to-value refinances have increased significantly. As an example, 2006 vintage GSE loans with six percent interest rates and LTV ratios between 100 and 125 percent increased from a 10 percent annualized prepayment rate at the end of 2011 to more than 40 percent in June 2012. Our data also shows that this rise in loan activity extends beyond that subsection – the same type of increase holds true across other vintages with the same characteristics.”
The report also shows that the rate of new problem loans entering the delinquency pipeline remained stable at multi-year lows. Late-stage delinquencies have also shown improvement over the last year, dropping more than seven percent.
Stable, but note judicial vs. non-judicial states
On a month-over-month basis, the national delinquency rate for loans 90 or more days delinquent remained stable, but after months of tracking very closely, the rate in judicial foreclosure states is now higher than in non-judicial.
The share of aged inventory is higher in judicial states as well, with nearly 50 percent of borrowers with loans 90 or more days delinquent not having made a payment in more than one year, as compared to just slightly more than 40 percent in non-judicial states. Further, nearly 60 percent of borrowers with loans in foreclosure in judicial states had not made a payment in at least two years, as of June.
Florida, Mississippi, Nevada, New Jersey, and Illinois had the highest percentages of non-current loans, while Montana, Alaska, Wyoming, South Dakota and North Dakota experiencing the lowest percentages of non-current loans.