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Foreclosure Starts See 31 Percent Year-Over-Year Drop in March

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The March Mortgage Monitor report released by Lender Processing Services Inc. (LPS) shows that while March foreclosure starts increased a modest 8.1 percent since last month, overall, they were still down more than 31 percent year-over-year. Also in March, first-time foreclosure starts hit a five-month high. However, despite the increase, the number of first-time foreclosure starts in March was still far below those seen throughout much of 2011 and all of the previous three years.

As reported in LPS' First Look, the national foreclosure inventory stayed relatively stable in March, remaining at the historically high levels maintained since the end of 2010. This national performance masks underlying differences between judicial states, where foreclosure inventory levels stand at 6.5 percent, and non-judicial states, where foreclosure inventory levels are more than 2.5 times lower at 2.45 percent.

The March data also showed that mortgage delinquencies have continued to decline, reaching their lowest level since August 2008, with seriously delinquent inventory (loans more than 90 days delinquent) declining in both judicial and non-judicial foreclosure states. Likewise, the rate of new problem loans (seriously delinquent loans that were current six months ago) continues to improve nationally, in both judicial and non-judicial states. At the same time, the LPS March mortgage performance data did show that foreclosure sales continued to behave somewhat erratically, dropping to their lowest level since December 2010, and most sharply in non-judicial states.

On the origination front, the data showed that February mortgage originations rebounded somewhat from their January lows, and that, despite slightly higher interest rates, prepayments increased in March. Mortgage prepayment activity—a key indicator of mortgage refinances— increased broadly, across all investor categories.

As reported in LPS' First Look release, other key results from LPS' latest Mortgage Monitor report include:

►Total U.S. loan delinquency rate: 7.09 %
►Month-over-month change in delinquency rate: -6.3 %
►Total U.S. foreclosure pre-sale inventory rate: 4.14 %
►Month-over-month change in foreclosure pre-sale inventory rate: -0.1 %
►States with highest percentage of non-current loans: FL, MS, NJ, NV, IL
►States with the lowest percentage of non-current loans: MT, AK, SD, WY, ND

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