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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 …

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.

Published in: Economy & Finance, Business

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  • 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. 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. 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. Prepayment rates are at the lowest level since May 2011 Lender Processing Services 4
  • 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. 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. Origination activity is down due to declining refinance incentives Lender Processing Services 7
  • 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. Most outstanding Hybrid ARMs have already reset Post-reset: 63% Pre-reset: 36% Lender Processing Services 9
  • 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. Indices would need to rise 300bps for most pre-crisis hybrid rates to increase Lender Processing Services 11
  • 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. DQ increases are in-line with seasonal patterns; FCs continue to drop Lender Processing Services 13
  • 14. First time foreclosure starts continue to drop to multi-year lows Lender Processing Services 14
  • 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. Non-current rates are highest in the Northeast and Southeast Lender Processing Services 16
  • 17. Foreclosure inventory issues are very state specific Lender Processing Services 17
  • 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. Home prices are up 9% YoY, but seasonal slowing is beginning Lender Processing Services 19
  • 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. Short sale volumes are decreasing, but still historically high Lender Processing Services 21
  • 22. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor October 2013 Appendix Data as of September, 2013 Month-end Lender Processing Services 22
  • 23. September 2013 Data Summary Lender Processing Services 23
  • 24. Seven of the top 10 states for total non-current are judicial Lender Processing Services 24
  • 25. Loan counts and average days delinquent Lender Processing Services 25
  • 26. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions Lender Processing Services 26
  • 27. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 27
  • 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. 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. 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. New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers Lender Processing Services 31
  • 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. Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired Lender Processing Services 33
  • 34. Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 34
  • 35. Performance Statistics Changes: Database Counts Lender Processing Services 35
  • 36. Performance Statistics Changes: State Level Detail Lender Processing Services 36