Lender Processing Services Inc. (LPS), a provider of integrated technology and services to the mortgage and real estate industries, has announced its release of the July 2009 LPS Mortgage Monitor, an in-depth report of mortgage industry performance indicators based on data collected as of June 30, 2009. Although market conditions remain challenging, several signs from this month's report are early indications that the nation's housing market may be turning a corner toward recovery. Positive indicators for June included:
► New delinquencies dropped to their second lowest level in the last year.
► The percentage of loans rolling to a more delinquent status declined across all product types.
► The gap between loans improving and loans deteriorating narrowed slightly.
► Total loan originations for the first half of 2009 were higher than 2008 levels for the same time.
LPS' Mortgage Monitor cited several factors that appear to be contributing to improvements in the housing market. First, at current interest rates there is a lowered risk of increased defaults associated with outstanding hybrid adjustable rate mortgage (ARM) resets. Second, liquidity is becoming increasingly available again to borrowers who are in some stage of delinquency. A dramatic improvement in borrower credit quality has created a significant decline in first payment defaults. Finally, the impact of homeowner aid programs, most notably the federal government's Making Home Affordable program, may be contributing to the resolution of many delinquent loans in the pipeline.
Positive trends were tempered by a continuation of disappointing results from much of the nation. Foreclosure inventories continued to climb to record highs, while non-current loans (defaults and foreclosures) rose to 11.44 percent. Foreclosure starts in June increased 1.6 percent to the second highest level on record, while reinstatement and recidivism rates are not yet showing signs of improvement. Jumbo prime loans continue to experience the highest rates of deterioration, with jumbo prime foreclosure rates up 580 percent since January 2008.
Other key results from LPS' July's Mortgage Monitor include:
► Total U.S. loan delinquency rate: 8.58 percent (a month-to-month increase of 1.1 percent; a year-to-year increase of 44 percent)
► Total U.S. foreclosure inventory rate: June's foreclosure rate was 2.86 percent (a month-to-month increase of 2.5 percent; a year-to-year increase of 86.1 percent)
► States with most non-current* loans: Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Michigan, Ohio and West Virginia
► States with fewest non-current* loans: North Dakota, South Dakota, Wyoming, Montana, Alaska, Vermont, Nebraska, Oregon, Colorado and Washington
► Loan originations** (Jan. - June 2009): 2,333,451 (versus 2,211,852 for Jan. - June 2008)
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
**Totals based on LPS Applied Analytics' loan-level database of mortgage assets.
To review the full report, listen to a presentation of the report or access an executive summary, click here.
For more information, visit www.lpsvcs.com.