Delinquencies Improving, but Total Distress Remains Elevated: LPS

Wed, Jun 2, 2010


By: Carrie Bay

The number of unpaid mortgages in the United States declined again in April, but delinquency roll rates remain high, according to an industry report released Monday by Lender Processing Services, Inc. (LPS).

The Florida-based analytics firm says that while signs of stabilization in the nation’s mortgage delinquency and foreclosure rates may be emerging, the progress is largely neutralized by the more than 7 million loans still in distress. Housing supplies remain bloated, but LPS notes that lenders’ operational processes are starting to drive inventory turn-over.

According to the company’s new Mortgage Monitor report, the number of loans 90 or more days delinquent (including pre-sale foreclosure) declined 112,184 – from 4,186,627 to 4,074,443 – between March and April. Add

to that LPS’ count of REO properties, and the company says it puts the total number of non-current U.S. home loans just over 7.3 million.

Based on LPS’ analysis, the total U.S. loan delinquency rate now stands at 8.99 percent, and the foreclosure inventory rate at 3.18 percent. That’s means 12.17 percent of the nation’s outstanding mortgages are non-current.

LPS’ study found that deterioration ratios remain high, with two loans rolling to a “worse” status for every one loan that has improved. In April, the overall volume of loans moving from delinquent to current status declined to a three-month low supported primarily by “artificial cures” associated with the administration’s Home Affordable Modification Program (HAMP), LPS said. At the same time, the company noted that foreclosure sales continue to rise as more loans deemed ineligible for HAMP are moving through the system.

Newly delinquent loans, meaning they were current at year-end and 60 or more days delinquent as of April, have declined from the sky-high levels seen in 2009, but still remain extremely high from a historical perspective, particularly within the prime loan product, LPS said.

The company’s analysis of its loan-level database of more than 40 million mortgages shows that the following states are home to the highest ratios of non-current loans: Florida, Nevada, Mississippi, Arizona, Georgia, California, Illinois, New Jersey, Michigan, and Rhode Island

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