LPS Mortgage Monitor - March 2013

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April 2013 Mortgage Performance Observations; Data as of February, 2013 Month-end

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LPS Mortgage Monitor - March 2013

  1. 1. Lender Processing Services 1ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.::::::::::::::::::::::::::::::::::::::::LPS Mortgage MonitorApril 2013 Mortgage Performance ObservationsData as of March, 2013 Month-end
  2. 2. Lender Processing Services 2• Focus 1: Delinquency trends and productmix• Focus 2: Foreclosure transitions andinventory, including regional focus• Focus 3: New problem loans and negativeequity trends• Focus 4: Originations and prepaymentactivityApril 2013 Focus Points
  3. 3. Lender Processing Services 3• Total non-current loan counts were below 5million for the first time since 2008• Severe delinquencies represent over 60% ofall non-current loans vs. 30% pre-crisis.• Government backed loans now representabout 80% of the active and current marketFocus Point 1: Delinquency trendsand product mix
  4. 4. Lender Processing Services 4Non-current loan count fell below 5million for the first time since 2008% of non-currentthat are 90+ DQor in foreclosure:2005: 30%2013: 62%
  5. 5. Lender Processing Services 5Government backed loans are ~80%of the total active and current market
  6. 6. Lender Processing Services 6• Foreclosure starts remain low after thenational mortgage settlement in late 2012• Foreclosure inventory decline has slowed,with judicial rates still over 3x non-judicial• Regional legislative and judicial activitycontinues to drive sharp differences inresolution ratesFocus Point 2: Foreclosure starts,sales and inventory
  7. 7. Lender Processing Services 7Foreclosure starts remain subduedpost National Mortgage SettlementForeclosure“cures” hit an8 month highin March-13NationalMortgageSettlementProcessReviewsFHFA Moratoria
  8. 8. Lender Processing Services 8FC inventory improvement slowing injudicial states; still 3.3x non-judicial
  9. 9. Lender Processing Services 9Foreclosure inventory resolutionvaries widely beyond judicial vs. nonMA: Lenders have to proveownership at FC saleNV: Affidavit requiredprior to foreclosureCA: Homeowner’s Bill of Rights (“HOBR”)NY and NJ: Processpenalties imposed
  10. 10. Lender Processing Services 10Legislative / judicial changes typicallyimpact the foreclosure sale stageCA HOBR:Nationalforeclosure sales(ex. CA) increased13% in Q1 2013vs. Q4 2012
  11. 11. Lender Processing Services 11• Ongoing home price improvement continuesto drive down negative equity• New problem loan rates are at their lowestlevels since 2007Focus Point 3: New Problem Loansand Negative Equity
  12. 12. Lender Processing Services 12Underwater borrowers are stillsignificantly more likely to default
  13. 13. Lender Processing Services 13Improving home prices continues todrive negative equity lower
  14. 14. Lender Processing Services 14New problem loan rates are almostback to pre-crisis levelsMarch 2013 was the firsttime new problem loanrates dropped below 1%since 2007
  15. 15. Lender Processing Services 15• Origination activity remains relatively strongwith increased non-government participation• Mortgage rates have edged up over the pastseveral months but remain near historiclows, keeping prepayment rates near recenthighsFocus Point 4: Originations andprepayment activity
  16. 16. Lender Processing Services 16Origination activity remains relativelystrong with increased non-gov’tNon-government % of total originations2005 2006 2007 2008 2009 2010 2011 201247.9% 48.2% 31.8% 13.2% 9.3% 10.6% 13.2% 14.1%
  17. 17. Lender Processing Services 17Prepayment speeds have remainedelevated with rates coming off lows
  18. 18. Lender Processing Services 18ONESOURCE.POWERFULSOLUTIONS.ONESOURCE.POWERFULSOLUTIONS.::::::::::::::::::::::::::::::::::::::::LPS Mortgage MonitorApril 2013 AppendixData as of March, 2013 Month-end
  19. 19. Lender Processing Services 19March 2013 Data Summary
  20. 20. Lender Processing Services 20Seven of the top 10 states for totalnon-current are judicial
  21. 21. Lender Processing Services 21Loan counts andaverage days delinquent
  22. 22. Lender Processing Services 22ONESOURCE.POWERFULSOLUTIONS.::::::::::::::::::::::::::::::::::::::::LPS Mortgage MonitorDisclosures: Product / Metric Definitions andJuly 2012 Market Sizing Revisions
  23. 23. Lender Processing Services 23Disclosure Page: Product Definitions*Conforming limits do not account for temporary or high-cost areaincreases.
  24. 24. Lender Processing Services 24Disclosure 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.
  25. 25. Lender Processing Services 25With 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.
  26. 26. Lender Processing Services 26The new scaling increases overall estimated industryloan count by approximately 1.2 million loansPrior industry estimates declinedbecause scaling didn’t supportcurrent servicing transfer volumes
  27. 27. Lender Processing Services 27New scaling reflects the higher coverage of governmentloans and allows for the incorporation of new servicers
  28. 28. Lender Processing Services 28Delinquencies decline based on higherestimated coverage of FHA and subprime loans.Converge due to newservicers and transferissues with prior scaling
  29. 29. Lender Processing Services 29Foreclosure inventory remains almost identical, butshifts up in recent months as transfer bias is repaired
  30. 30. Lender Processing Services 30Foreclosure starts remain consistent, withrates shifting up slightly
  31. 31. Lender Processing Services 31Performance Statistics Changes: Database Counts
  32. 32. Lender Processing Services 32Performance Statistics Changes: State Level Detail

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