The August Mortgage Monitor report from Lender Processing Services Inc. (LPS) shows that foreclosure starts were up in August by nearly 20 percent compared to July 2011 results, with first-time foreclosure starts reaching 2011 highs. Overall, foreclosure starts remained down more than 12 percent from this time last year. At the same time, of the approximately four million loans that are either 90 or more days delinquent or in foreclosure, the number in the 90 or more days category has shrunk to levels not seen since 2008.
The August data also showed that, of loans that were current six months prior, 1.4 percent had become seriously delinquent, a rate of less than half of the peak of 2.9 percent in 2009. At the same time, “first-time” delinquencies (new problem loans that had never been delinquent before) accounted for approximately a quarter of total new delinquencies—further signs of an improving trend for new problem loans. However, of the nearly 46 million loans that were current as of the end of August, 23 percent were still at risk as a result of negative equity—a leading indicator of a borrower’s propensity to default.
The results in August showed an all-time high in the number of loans shifting from foreclosure back into delinquent status, suggesting that process reviews and potential loss mitigation activity are continuing. As a result, foreclosure timelines continue to increase, with the average loan in foreclosure having been delinquent for a record 611 days. Average delinquencies in non-judicial states continue to be about six months shorter at time of foreclosure sale compared to judicial states, where backlogs continue to be extremely high.
As reported in LPS' August 2011 First Look release, other key results from LPS' latest Mortgage Monitor report include:
►Total U.S. loan delinquency rate: 8.13 percent
►Month-over-month change in delinquency rate: -2.5 percent
►Total U.S foreclosure pre-sale inventory rate: 4.11 percent
►Month-over-month change in foreclosure pre-sale inventory rate: 0.1 percent
►States with highest percentage of non-current* loans: Florida, Mississippi, Nevada, New Jersey and Illinois
►States with the lowest percentage of non-current* loans: North Dakota, South Dakota, Alaska, Wyoming and Montana
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.