LPS Mortgage Monitor - August 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 - August 2013

  1. 1. Lender Processing Services 1 ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor September 2013 Mortgage Performance Observations Data as of August, 2013 Month-end
  2. 2. Lender Processing Services 2 • Focus 1: Prepayment activity and refinance opportunities • Focus 2: Home price improvement and HE potential • Focus 3: Foreclosure sales and pipeline update September 2013 Focus Points
  3. 3. Lender Processing Services 3 • Prepayment rates declined sharply in August as mortgage rates continued to rise • Over 50% of borrowers are now “out of the money” for refinancing • 5.7M loans have “refinancible” characteristics, down from ~10M in Dec-12 • HARP activity has declined, but still about 30% of GSE originations Focus Point 1: Prepayment activity and refinance opportunities
  4. 4. Lender Processing Services 4 Prepayments down over 30% since May with ~100bp rate rise
  5. 5. Lender Processing Services 5 Originations were strong through July but prepayments signal decline
  6. 6. Lender Processing Services 6 Over 50% of borrowers are now “out of the money” for refinancing
  7. 7. Lender Processing Services 7 5.7M loans have “refinancible” characteristics vs. 10M in Dec-12
  8. 8. Lender Processing Services 8 ~30% of today’s GSE originations are HARP Bubble Crisis HARP
  9. 9. Lender Processing Services 9 • National home prices continue to improve, though most regions have had small gains relative to losses • Recent vintages have very few second liens as compared to earlier years • Higher mortgage rates and home prices may lead to new opportunity for HEs Focus Point 2: Home price improvement and HE potential
  10. 10. Lender Processing Services 10 Home prices are at their highest levels since 2009
  11. 11. Lender Processing Services 11 Most regions have had small home price gains relative to their losses -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% -80% -60% -40% -20% 0% 20% Peak-to-Trough HPI Change (7/2006 - 1/2012) Peak-to-TodayHPIChange (7/2006-5/2013) Austin New York Phoenix San Jose Las Vegas Hardest hit areas are up marginally from the bottom
  12. 12. Lender Processing Services 12 Recent vintages have very few seconds compared to earlier years 0% 10% 20% 30% 40% 50% 60% 2003 2005 2007 2009 2011 2013 FirstLienMortgagesWhich HaveaSecondLien 2003 vintage used seconds to take cash out Bubble vintages took out second liens at origination. 2010 2003 2006
  13. 13. Lender Processing Services 13 Higher rates and home prices may lead to new opportunity for HEs 0% 10% 20% 30% 40% 50% 60% 70% 2000 2002 2004 2006 2008 2010 2012 Vintage FirstLienMortgagesWhich HaveaSecondLien Today At Origination By 2017, if recent vintages follow the pattern of the 2003 vintage.
  14. 14. Lender Processing Services 14 • Foreclosure sales have been increasing, but monthly average for ’13 is lower than ‘12 • Foreclosure starts continue to decline • National foreclosure pipelines are shrinking, but pressure is still growing or extreme in several states Focus Point 3: Foreclosure sales and pipeline update
  15. 15. Lender Processing Services 15 FC sales up, but avg 61k/mo in ‘13 vs. 73k in ‘12; starts continue to decline
  16. 16. Lender Processing Services 16 National foreclosure pipelines continue to shrink
  17. 17. Lender Processing Services 17 Pipeline pressure is still growing or extreme in many states +68% since Q4 2012 +136% since Q2 2012 +56% since Q4 2011
  18. 18. Lender Processing Services 18 ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor September 2013 Appendix Data as of August, 2013 Month-end
  19. 19. Lender Processing Services 19 August 2013 Data Summary
  20. 20. Lender Processing Services 20 Seven of the top 10 states for total non-current are judicial
  21. 21. Lender Processing Services 21 Loan counts and average days delinquent
  22. 22. Lender Processing Services 22 ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions
  23. 23. Lender Processing Services 23 Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases.
  24. 24. Lender Processing Services 24 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.
  25. 25. Lender Processing Services 25 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.
  26. 26. Lender Processing Services 26 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
  27. 27. Lender Processing Services 27 New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers
  28. 28. Lender Processing Services 28 Delinquencies decline based on higher estimated coverage of FHA and subprime loans. Converge due to new servicers and transfer issues with prior scaling
  29. 29. Lender Processing Services 29 Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired
  30. 30. Lender Processing Services 30 Foreclosure starts remain consistent, with rates shifting up slightly
  31. 31. Lender Processing Services 31 Performance Statistics Changes: Database Counts
  32. 32. Lender Processing Services 32 Performance Statistics Changes: State Level Detail

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