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

LPS Mortg...
October 2013 Focus Points
• Focus 1: Prepayment activity; response to
rising mortgage rates
• Focus 2: Hybrid ARM resets a...
Focus Point 1: Prepayment activity
and response to rising mortgage rates
• Prepayments are at their lowest levels since
Ma...
Prepayment rates are at the
lowest level since May 2011

Lender Processing Services

4
GNMA loans have seen the largest
drops in prepayment speeds

Investor
GNMA

-55%

GSE

-50%

Portfolio

-39%

Private

Len...
Prepayment speeds in HARP-able
cohorts have also dropped sharply

LTV
<80

-39%

80-100

-37%

100-120

-43%

120+

Lender...
Origination activity is down due to
declining refinance incentives

Lender Processing Services

7
Focus Point 2: Hybrid ARM resets
and potential payment impact
• Most outstanding Hybrid ARMs have already
reset
• Over 75%...
Most outstanding Hybrid ARMs
have already reset
Post-reset: 63%

Pre-reset: 36%

Lender Processing Services

9
Over 75% of pre-reset hybrids
were originated post-crisis

More than 60% of
originations
since 2010 have
760+ credit score...
Indices would need to rise 300bps for
most pre-crisis hybrid rates to increase

Lender Processing Services

11
Focus Point 3: Delinquency and
foreclosure trends
• Delinquencies increased, but in-line with
seasonal pattern
• Foreclosu...
DQ increases are in-line with seasonal
patterns; FCs continue to drop

Lender Processing Services

13
First time foreclosure starts continue
to drop to multi-year lows

Lender Processing Services

14
New problem loan rates are
close to pre-crisis levels
New problem loan rates
in judicial states are
higher than non-judici...
Non-current rates are highest in the
Northeast and Southeast

Lender Processing Services

16
Foreclosure inventory issues
are very state specific

Lender Processing Services

17
Focus Point 4: Home prices
and sales activity
• Home prices are up about 9% year over
year, but increases are starting to ...
Home prices are up 9% YoY, but
seasonal slowing is beginning

Lender Processing Services

19
Home sales remain at the highest
levels since 2007
Year
2010

31%

2011

33%

2012

29%

2013

Lender Processing Services
...
Short sale volumes are decreasing,
but still historically high

Lender Processing Services

21
ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

LPS Mortg...
September 2013 Data Summary

Lender Processing Services

23
Seven of the top 10 states for total
non-current are judicial

Lender Processing Services

24
Loan counts and
average days delinquent

Lender Processing Services

25
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

34
Performance Statistics Changes: Database Counts

Lender Processing Services

35
Performance Statistics Changes: State Level Detail

Lender Processing Services

36
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LPS Mortgage Monitor - September 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 - September 2013

  1. 1. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor October 2013 Mortgage Performance Observations Data as of September, 2013 Month-end Lender Processing Services 1
  2. 2. October 2013 Focus Points • Focus 1: Prepayment activity; response to rising mortgage rates • Focus 2: Hybrid ARM resets and potential payment impact • Focus 3: Delinquency and Foreclosure trends • Focus 4: Home prices and sales activity Lender Processing Services 2
  3. 3. Focus Point 1: Prepayment activity and response to rising mortgage rates • Prepayments are at their lowest levels since May 2011 as mortgage rates continue to rise • GNMA loans experienced the largest drop • Prepayment speeds in HARP-able cohorts have also dropped sharply • Origination activity is down due to declining refinance incentives Lender Processing Services 3
  4. 4. Prepayment rates are at the lowest level since May 2011 Lender Processing Services 4
  5. 5. GNMA loans have seen the largest drops in prepayment speeds Investor GNMA -55% GSE -50% Portfolio -39% Private Lender Processing Services Vs. May-13 -19% 5
  6. 6. Prepayment speeds in HARP-able cohorts have also dropped sharply LTV <80 -39% 80-100 -37% 100-120 -43% 120+ Lender Processing Services Vs. May-13 -41% 6
  7. 7. Origination activity is down due to declining refinance incentives Lender Processing Services 7
  8. 8. Focus Point 2: Hybrid ARM resets and potential payment impact • Most outstanding Hybrid ARMs have already reset • Over 75% of pre-reset hybrids were originated post-crisis (where loan quality is pristine) • Indices would need to rise significantly for rates to increase on pre-crisis originated hybrids Lender Processing Services 8
  9. 9. Most outstanding Hybrid ARMs have already reset Post-reset: 63% Pre-reset: 36% Lender Processing Services 9
  10. 10. Over 75% of pre-reset hybrids were originated post-crisis More than 60% of originations since 2010 have 760+ credit scores Lender Processing Services 10
  11. 11. Indices would need to rise 300bps for most pre-crisis hybrid rates to increase Lender Processing Services 11
  12. 12. Focus Point 3: Delinquency and foreclosure trends • Delinquencies increased, but in-line with seasonal pattern • Foreclosure inventories continue to improve with first time foreclosure starts at multi-year lows • New problem loan rates remain close to precrisis levels Lender Processing Services 12
  13. 13. DQ increases are in-line with seasonal patterns; FCs continue to drop Lender Processing Services 13
  14. 14. First time foreclosure starts continue to drop to multi-year lows Lender Processing Services 14
  15. 15. New problem loan rates are close to pre-crisis levels New problem loan rates in judicial states are higher than non-judicial (1.0% vs. 0.8%) Lender Processing Services 15
  16. 16. Non-current rates are highest in the Northeast and Southeast Lender Processing Services 16
  17. 17. Foreclosure inventory issues are very state specific Lender Processing Services 17
  18. 18. Focus Point 4: Home prices and sales activity • Home prices are up about 9% year over year, but increases are starting to slow due to seasonality • Sales remain high with lower share of distressed • Short sale volumes are decreasing, but remain historically high Lender Processing Services 18
  19. 19. Home prices are up 9% YoY, but seasonal slowing is beginning Lender Processing Services 19
  20. 20. Home sales remain at the highest levels since 2007 Year 2010 31% 2011 33% 2012 29% 2013 Lender Processing Services Distressed % 19% 20
  21. 21. Short sale volumes are decreasing, but still historically high Lender Processing Services 21
  22. 22. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor October 2013 Appendix Data as of September, 2013 Month-end Lender Processing Services 22
  23. 23. September 2013 Data Summary Lender Processing Services 23
  24. 24. Seven of the top 10 states for total non-current are judicial Lender Processing Services 24
  25. 25. Loan counts and average days delinquent Lender Processing Services 25
  26. 26. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions Lender Processing Services 26
  27. 27. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 27
  28. 28. 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 28
  29. 29. 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 29
  30. 30. 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 30
  31. 31. New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers Lender Processing Services 31
  32. 32. 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 32
  33. 33. Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired Lender Processing Services 33
  34. 34. Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 34
  35. 35. Performance Statistics Changes: Database Counts Lender Processing Services 35
  36. 36. Performance Statistics Changes: State Level Detail Lender Processing Services 36

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