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Lender Processing Services 3• Prepayment speeds elevated but off recenthighs as rates remain near record lows• Signs of burnout may be starting to appearin the non-HARPable vintages• Liquidity is extending into the lower credittiers as well• There is still significant refinance opportunityin the marketFocus Point 1: “Refinancibility” withprepayment rate detail
Lender Processing Services 4Prepayments elevated but off highsas rates remain near record lows
Lender Processing Services 5Potential signs of burnout appearingin the non-HARPable vintagesPre-2009 vintages are athistoric highs (HARP eligibilitylimited to loans originatedprior to May-09)
Lender Processing Services 6Liquidity for lower credit borrowershas been steadily increasingSpeeds for credit scoresunder 720 increased 20-30% YoY vs. 7% for 720+
Lender Processing Services 7Approx. 18% of outstanding loanshave refinancible characteristicsIn December 2012~9.4 million loansmet these criteria
Lender Processing Services 8• The December to April seasonal decline indelinquencies was the largest since 2004• The “deterioration ratio” (loans getting worsevs. better) has been below 1.0 for 9 of thelast 10 months• While delinquencies are resolving,foreclosure inventories are still significantlyhigher than pre-crisis across all productsFocus Point 2: Delinquency trendsand seasonal activity
Lender Processing Services 9DQs down 13.4% since Dec ‘12;largest seasonal drop since ‘04
Lender Processing Services 10Deterioration ratio has been below 1.0for 9 of the last 10 months
Lender Processing Services 11Foreclosure inventories are stillsignificantly higher than pre-crisis
Lender Processing Services 12• Significant timeline differences remainbetween judicial and non-judicial states• Recent divergence in foreclosure startactivity is also impacting late stagedelinquent inventories• However, there are signs that foreclosureinventories are starting to move even injudicial statesFocus Point 3: Foreclosure pipeline;judicial vs. non-judicial update
Lender Processing Services 13Timeline differences between judicialand non-judicial continue to grow
Lender Processing Services 14Judicial 90+ DQ inventory has beensteady vs. a decline in non-judicial
Lender Processing Services 15Judicial foreclosure sale rateshit the highest level since 2010
Lender Processing Services 16Judicial FC inventory down 6% M/M;still 3.3x non-judicial
Lender Processing Services 17ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.::::::::::::::::::::::::::::::::::::::::LPS Mortgage MonitorMay 2013 AppendixData as of April, 2013 Month-end
Lender Processing Services 18April 2013 Data Summary
Lender Processing Services 19Seven of the top 10 states for totalnon-current are judicial
Lender Processing Services 20Loan counts andaverage days delinquent
Lender Processing Services 22Disclosure Page: Product Definitions*Conforming limits do not account for temporary or high-cost areaincreases.
Lender Processing Services 23Disclosure Page: Metrics Definitions• Total Active Count: All active loans as of month-end including loans in any state ofdelinquency or foreclosure. Post-sale loans and loans in REO are excluded from the totalactive count.• Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated usingthe MBA methodology based on the payment due date provided by the servicer. Loans inforeclosure 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 andwere 90 days delinquent, but not in foreclosure, in the current month.• Foreclosure Inventory: The servicer has referred the loan to an attorney forforeclosure. Loans remain in foreclosure inventory from referral to sale.• Foreclosure Starts – Any active loan that was not in foreclosure in the prior month thatmoves 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 thatmoves 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 delinquencystatus vs. those improving.
Lender Processing Services 24With the June 2012 month-end data, LPS has updated itsextrapolation methodology to incorporate, among otherthings, improved estimates of market size, which includeshigher coverage of government and subprime products andincreases LPS’ estimate of the total first lien residentialmortgage market by three percent to 50.4 million.To ensure consistency in trend analysis, the newmethodology has been applied to all historical data andpreviously reported mortgage performance statistics havebeen adjusted accordingly.The following section contains information on marketcoverage and comparisons with previously reportedstatistics. Additional information is available upon request.
Lender Processing Services 25The new scaling increases overall estimated industryloan count by approximately 1.2 million loansPrior industry estimates declinedbecause scaling didn’t supportcurrent servicing transfer volumes
Lender Processing Services 26New scaling reflects the higher coverage of governmentloans and allows for the incorporation of new servicers
Lender Processing Services 27Delinquencies decline based on higherestimated coverage of FHA and subprime loans.Converge due to newservicers and transferissues with prior scaling
Lender Processing Services 28Foreclosure inventory remains almost identical, butshifts up in recent months as transfer bias is repaired