Lender Processing Services (LPS) released its February Mortgage Monitor Report revealing that a huge backlog of foreclosures continues to exist despite a continued decline in delinquencies. The data also shows a 23 percent increase in Option ARM foreclosures over the last six months, far higher than any other product type.
The report cites three primary reasons for the enormous backlog in foreclosures:
- There are three times the number of loans deteriorating greater than 90+ days delinquent as compared to foreclosure starts;
- There are three times the number of foreclosure starts vs. foreclosure sales;
- Foreclosure inventory levels are over 30 times monthly foreclosure sale volume.
Option ARM foreclosures accounted for 18.8 percent of all foreclosures, a level the report notes, that was higher than sub-prime loans ever reached.
In addition, deterioration continues in the Non-Agency Prime segment. Both Jumbo and Conforming Non-Agency Prime loans showed increases in foreclosures and were the only product areas with increases in delinquencies.
LPS’ data also showed 22 percent of loans that were 90+ days delinquent 12 months ago are now current, which they attributed to banks’ loan modification efforts.
However, foreclosure timelines continued to be extended as the average foreclosure now has been delinquent for a record 537 days and a 30 percent of loans in foreclosure have not made a payment in two years.
Foreclosure inventories continue to grow as foreclosure starts decline and foreclosure suspensions, due to self-imposed moratoriums by mortgage servicers caused by paperwork scandals, slows the amount of foreclosures to market.
2010 originations peaked in Q4 2010, with government loans making up almost 87 percent of all originated loans. Prepayment rates (an indicator of refinance activity) have dropped sharply since, indicating that this is unlikely to continue into 2011.
Tags: LPS, Mortgage Monitor Report, foreclosure backlog, deteriorating loans, ARM foreclosures, sub-prime loans, delinquencies, loan modifications, foreclosure timelines
No comments:
Post a Comment