The May Mortgage Monitor Report released by Lender Processing Services Inc. (LPS) shows that the nation's foreclosure inventory remains near all-time highs, with 4.12 percent of all active mortgages in the foreclosure pipeline in addition to the 3.2 percent that are 90 days or more delinquent but have not yet begun the foreclosure process. According to LPS Applied Analytics Senior Vice President Herb Blecher, the situation is more nuanced when looking at the breakdown between states that apply judicial versus non-judicial foreclosure processes.
"There's a stark contrast in foreclosure inventories between judicial and non-judicial states," Blecher said. "In the former, 6.5 percent of all loans are in some stage of foreclosure—that's more than 2.5 times the rate in non-judicial states where only 2.5 percent of loans are currently in the foreclosure pipeline. Both these figures are significantly higher than the pre-crisis average of 0.5 percent, but it is worth noting that the average year-over-year decline in non-current loans for judicial states is less than one percent, whereas in non-judicial states, it's down 7.1 percent."
The difference between judicial and non-judicial states impacts the length of time loans remain in the foreclosure pipeline as well; the percent of aged foreclosure inventory has increased notably in judicial states. Approximately 53 percent of loans in foreclosure in states that follow a judicial foreclosure process have been delinquent for more than two years, as compared to just over 30 percent of loans in non-judicial states.
Nationwide, foreclosure sales were up 10 percent in May with the increase more pronounced in non-judicial states. In those states, 6.46 percent of the existing foreclosure inventory progressed to foreclosure sale in May, as compared to just 2.14 percent of the inventory in judicial states.
The May data also shows that after a sharp seasonal decline, delinquencies stabilized, up just 1.1 percent for the month to 7.2 percent, but still down almost 12 percent year to date. In addition, new problem loan rates continue to improve, with rates dropping for the eighth consecutive month—reaching a point (1.06 percent) not seen since July 2007, and well off their January 2009 peak of 2.92 percent. Finally, foreclosure starts were up for the month, rising 11.6 percent from April, though still low by historical standards and more than 40 percent off their September 2010 peak.
As reported in LPS' First Look release, other key results from LPS' latest Mortgage Monitor report include:
►Total U.S. loan delinquency rate: 7.2 %
►Month-over-month change in delinquency rate: 1.1 %
►Total U.S. foreclosure pre-sale inventory rate: 4.12 %
►Month-over-month change in foreclosure pre-sale inventory rate: -0.5 %
►States with highest percentage of non-current loans: Florida, Mississippi, New Jersey, Nevada and Illinois
►States with the lowest percentage of non-current loans: Montana, Alaska, South Dakota, Wyoming and North Dakota
