ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

LPS Mortg...
Focus Points
• Focus 1: Prepayment activity, origination
and property sales update
• Focus 2: Home prices and negative equ...
Focus Point 1: Prepayment activity,
origination and property sales update
• Prepayments dropped again in October, but
the ...
Prepayments down again but decline
has slowed in response to lower rates

Lender Processing Services

4
Originations down sharply; 43% drop
since June, lowest since mid-2011

Lender Processing Services

5
Refinances are ~50% of originations
down from over 75% in January

Lender Processing Services

6
Home sales declined, but distressed
share continues to improve

14.2% of September
transactions were
REO or Short Sales –
...
Focus Point 2: Home prices
and negative equity
• Home prices are up about 9% year over
year, but seasonal slowing continue...
Home price improvement continues;
national average highest since 2008

Lender Processing Services

9
Short sale discounts are declining
as volumes decrease

Sale
Month

REO % of
Distressed

Short Sale %
of Distressed

Sep-2...
Home price improvement is driving
negative equity lower

Applying distressed property
discounts, 11.6% of loans are
underw...
Despite performance improvements
sand states still most underwater

Negative Equity %
0%

>=20%

Lender Processing Service...
Focus Point 3: Judicial vs. nonjudicial state disparities
• Judicial states are lagging in price recovery
since the nation...
Judicial states are lagging in price
recovery since Jan-12 (nat’l trough)

Lender Processing Services

14
New problem loan rates are higher in
judicial states and the gap has grown

Lender Processing Services

15
FC starts in judicial states have
remained elevated vs. non-judicial

Lender Processing Services

16
Pipeline ratio in judicial states has
improved due to increased FC sales

Lender Processing Services

17
Focus Point 4: Home Equity
market risks
• Overall, HE delinquencies have been
trending down
• Over 75% of outstanding HEs ...
In total, the Home Equity market is
experiencing lower delinquencies

Lender Processing Services

19
Over 75% of outstanding HEs were
originated between 2004 and 2009

Lender Processing Services

20
New problem loans in amortizing
LOC vintages* are increasing
* Assumes 10 year term to amortization

Lender Processing Ser...
Credit scores have shifted down for
‘04-‘08  LOCs  with  more  UPB  at  risk

Lender Processing Services

22
ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

LPS Mortg...
October 2013 Data Summary

Lender Processing Services

24
Seven of the top 10 states for total
non-current are judicial

Lender Processing Services

25
Loan counts and
average days delinquent

Lender Processing Services

26
ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

LPS Mortg...
Disclosure Page: Product Definitions

*Conforming limits do not account for temporary or high-cost area
increases.

Lender...
Disclosure Page: Metrics Definitions
•

•

•
•
•
•
•
•
•

Total Active Count: All active loans as of month-end including l...
With the June 2012 month-end data, LPS has updated its
extrapolation methodology to incorporate, among other
things, impro...
The new scaling increases overall estimated industry
loan count by approximately 1.2 million loans

Prior industry estimat...
New scaling reflects the higher coverage of government
loans and allows for the incorporation of new servicers

Lender Pro...
Delinquencies decline based on higher
estimated coverage of FHA and subprime loans.

Converge due to new
servicers and tra...
Foreclosure inventory remains almost identical, but
shifts up in recent months as transfer bias is repaired

Lender Proces...
Foreclosure starts remain consistent, with
rates shifting up slightly

Lender Processing Services

35
Performance Statistics Changes: Database Counts

Lender Processing Services

36
Performance Statistics Changes: State Level Detail

Lender Processing Services

37
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LPS Mortgage Monitor - October 2013

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LPS manages the nation's leading repository of loan-level residential mortgage data and performance information on nearly 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report.

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LPS Mortgage Monitor - October 2013

  1. 1. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Mortgage Market Performance Observations Data as of October, 2013 Month-end Lender Processing Services 1
  2. 2. Focus Points • Focus 1: Prepayment activity, origination and property sales update • Focus 2: Home prices and negative equity • Focus 3: Judicial vs. non-judicial state disparities • Focus 4: Home Equity market risks Lender Processing Services 2
  3. 3. Focus Point 1: Prepayment activity, origination and property sales update • Prepayments dropped again in October, but the decline has slowed with lower rates • Originations were down sharply and are at the lowest point since mid-2011 • Refinances represent ~50% of originations, down from 75% at the start of the year • Sales have followed a similar path, though distressed ratios are still improving Lender Processing Services 3
  4. 4. Prepayments down again but decline has slowed in response to lower rates Lender Processing Services 4
  5. 5. Originations down sharply; 43% drop since June, lowest since mid-2011 Lender Processing Services 5
  6. 6. Refinances are ~50% of originations down from over 75% in January Lender Processing Services 6
  7. 7. Home sales declined, but distressed share continues to improve 14.2% of September transactions were REO or Short Sales – lowest  share  since  ‘07 Lender Processing Services 7
  8. 8. Focus Point 2: Home prices and negative equity • Home prices are up about 9% year over year, but seasonal slowing continues • Short sale discounts are declining as volumes decrease • Home price improvement is driving negative equity lower • Sand states still the most underwater Lender Processing Services 8
  9. 9. Home price improvement continues; national average highest since 2008 Lender Processing Services 9
  10. 10. Short sale discounts are declining as volumes decrease Sale Month REO % of Distressed Short Sale % of Distressed Sep-2010 58% 42% Sep-2011 54% 46% Sep-2012 44% 56% Sep-2013 56% Short Sale Discount: 24.5% 44% REO Discount: 25.9% Lender Processing Services 10
  11. 11. Home price improvement is driving negative equity lower Applying distressed property discounts, 11.6% of loans are underwater (down from 18.8% in January) Lender Processing Services 11
  12. 12. Despite performance improvements sand states still most underwater Negative Equity % 0% >=20% Lender Processing Services 12
  13. 13. Focus Point 3: Judicial vs. nonjudicial state disparities • Judicial states are lagging in price recovery since the national trough in January 2012 • New problem loan rates are higher in judicial states than non, and the gap has grown • Foreclosure starts in judicial states have remained elevated, but pipeline ratios are improving as a result of increased foreclosure activity Lender Processing Services 13
  14. 14. Judicial states are lagging in price recovery since Jan-12 (nat’l trough) Lender Processing Services 14
  15. 15. New problem loan rates are higher in judicial states and the gap has grown Lender Processing Services 15
  16. 16. FC starts in judicial states have remained elevated vs. non-judicial Lender Processing Services 16
  17. 17. Pipeline ratio in judicial states has improved due to increased FC sales Lender Processing Services 17
  18. 18. Focus Point 4: Home Equity market risks • Overall, HE delinquencies have been trending down • Over 75% of outstanding HEs were originated between 2004 and 2009 (where LOCs have not started amortizing) • New problem loans in amortizing LOC vintages are increasing • Credit scores in pre-amortizing vintages have shifted down with more UPB at risk Lender Processing Services 18
  19. 19. In total, the Home Equity market is experiencing lower delinquencies Lender Processing Services 19
  20. 20. Over 75% of outstanding HEs were originated between 2004 and 2009 Lender Processing Services 20
  21. 21. New problem loans in amortizing LOC vintages* are increasing * Assumes 10 year term to amortization Lender Processing Services 21
  22. 22. Credit scores have shifted down for ‘04-‘08  LOCs  with  more  UPB  at  risk Lender Processing Services 22
  23. 23. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Appendix Data as of October, 2013 Month-end Lender Processing Services 23
  24. 24. October 2013 Data Summary Lender Processing Services 24
  25. 25. Seven of the top 10 states for total non-current are judicial Lender Processing Services 25
  26. 26. Loan counts and average days delinquent Lender Processing Services 26
  27. 27. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions Lender Processing Services 27
  28. 28. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 28
  29. 29. Disclosure Page: Metrics Definitions • • • • • • • • • Total Active Count: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total active count. Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquent. 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month. Foreclosure Inventory: The servicer has referred the loan to an attorney for foreclosure. Loans remain in foreclosure inventory from referral to sale. Foreclosure Starts – Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month. Non-Current: Loans in any stage of delinquency or foreclosure. Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that moves into post-sale status or is flagged as a foreclosure liquidation. REO: The loan is in post-sale foreclosure status. Listing status is not a consideration, this includes all properties on and off the market. Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving. Lender Processing Services 29
  30. 30. With the June 2012 month-end data, LPS has updated its extrapolation methodology to incorporate, among other things, improved estimates of market size, which includes higher coverage of government and subprime products and increases  LPS’  estimate  of  the  total  first  lien  residential   mortgage market by three percent to 50.4 million. To ensure consistency in trend analysis, the new methodology has been applied to all historical data and previously reported mortgage performance statistics have been adjusted accordingly. The following section contains information on market coverage and comparisons with previously reported statistics. Additional information is available upon request. Lender Processing Services 30
  31. 31. The new scaling increases overall estimated industry loan count by approximately 1.2 million loans Prior industry estimates declined because scaling didn’t  support current servicing transfer volumes Lender Processing Services 31
  32. 32. New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers Lender Processing Services 32
  33. 33. Delinquencies decline based on higher estimated coverage of FHA and subprime loans. Converge due to new servicers and transfer issues with prior scaling Lender Processing Services 33
  34. 34. Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired Lender Processing Services 34
  35. 35. Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 35
  36. 36. Performance Statistics Changes: Database Counts Lender Processing Services 36
  37. 37. Performance Statistics Changes: State Level Detail Lender Processing Services 37
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