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LPS Mortgage Monitor - May 2013


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June 2013 Mortgage Performance Observations; Data as of May, 2013 Month

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LPS Mortgage Monitor - May 2013

  1. 1. Lender Processing Services 1 ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor June 2013 Mortgage Performance Observations Data as of May, 2013 Month-end
  2. 2. Lender Processing Services 2 • Focus 1: Delinquency trend improvement with new problem loan update • Focus 2: Home price advances and negative equity impact • Focus 3: Originations, attributes and loan prepayment activity June 2013 Focus Points
  3. 3. Lender Processing Services 3 • Delinquencies continued to decline in May; largest year-to-date drop since ’02 • Improvement supported by low new problem loan rates that now approach the pre-crisis average • Prime delinquencies have experienced the greatest decline since the Jan-10 peak; down 40-50% Focus Point 1: DQ trend improvement with new problem loan update
  4. 4. Lender Processing Services 4 DQs down over 15% since Dec ‘12; largest year-to-date drop since ‘02 May-13 vs. ‘95-’05 average Delinquencies 1.4x Foreclosures 5.7x
  5. 5. Lender Processing Services 5 New problem loan rates continue to decline towards pre-crisis average
  6. 6. Lender Processing Services 6 Prime delinquencies are down 40-50% from Jan-10 peak
  7. 7. Lender Processing Services 7 While volumes have declined, serious DQ inventories continue to age
  8. 8. Lender Processing Services 8 • Equity status continues to be a strong driver of new problem loan rates • Home prices increase continued as of the latest data; up over 8% year over year • Improvement in home prices has lowered national negative equity rates to below 15% Focus Point 2: Home price advances and negative equity impact
  9. 9. Lender Processing Services 9 Equity status continues to drive new problem loan rates
  10. 10. Lender Processing Services 10 Home prices have increased over 8% since April 2012
  11. 11. Lender Processing Services 11 Negative equity percentage has dropped below 15% nationally
  12. 12. Lender Processing Services 12 Distressed sales ~23% of total for 2013; lowest levels since ‘08
  13. 13. Lender Processing Services 13 • 2013 origination activity remained strong through April • Prepayment rates indicate higher May refinance activity despite increased rates • Recent vintages continue to display pristine credit quality and performance Focus Point 3: Originations, attributes and loan prepayment activity
  14. 14. Lender Processing Services 14 Strength in 2013 originations continued through April 2005 2006 2007 2008 2009 2010 2011 2012 2013 Count 13.1M 11.2M 9.1M 6.7M 8.3M 7.2M 6.4M 8.8M 3.2M (thru Apr) % Gov 52% 52% 69% 87% 91% 89% 87% 84% TBD
  15. 15. Lender Processing Services 15 Prepayments indicate higher May refi activity despite increased rates
  16. 16. Lender Processing Services 16 Recent vintages continue to display pristine credit quality & performance The weighted average credit score for 2013 originations is 754
  17. 17. Lender Processing Services 17 ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor June 2013 Appendix Data as of May, 2013 Month-end
  18. 18. Lender Processing Services 18 May 2013 Data Summary
  19. 19. Lender Processing Services 19 Seven of the top 10 states for total non-current are judicial
  20. 20. Lender Processing Services 20 Loan counts and average days delinquent
  21. 21. Lender Processing Services 21 ONESOURCE.POWERFULSOLUTIONS.:::::::::::::::::::::::::::::::::::::::: LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions
  22. 22. Lender Processing Services 22 Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases.
  23. 23. Lender Processing Services 23 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.
  24. 24. Lender Processing Services 24 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.
  25. 25. Lender Processing Services 25 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
  26. 26. Lender Processing Services 26 New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers
  27. 27. Lender Processing Services 27 Delinquencies decline based on higher estimated coverage of FHA and subprime loans. Converge due to new servicers and transfer issues with prior scaling
  28. 28. Lender Processing Services 28 Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired
  29. 29. Lender Processing Services 29 Foreclosure starts remain consistent, with rates shifting up slightly
  30. 30. Lender Processing Services 30 Performance Statistics Changes: Database Counts
  31. 31. Lender Processing Services 31 Performance Statistics Changes: State Level Detail