LPS Mortgage Monitor - February 2013

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

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LPS Mortgage Monitor - February 2013

  1. 1. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor March 2013 Mortgage Performance Observations Data as of February, 2013 Month-end Lender Processing Services 1
  2. 2. February 2013 Focus Points• Focus 1: Prepayment rates with vintage and product view• Focus 2: Delinquency trends and late stage focus• Focus 3: Loan “cure” rates and modification activity• Focus 4: Performance by vintage - default curves Lender Processing Services 2
  3. 3. Focus Point 1: Prepayment Rates• Increased mortgage rates have led to a slight decline in loan prepayments• Recent vintages are reacting similarly during this refinance wave• GNMA and portfolio loans have been relatively unreactive to lower interest rates Lender Processing Services 3
  4. 4. Increased mortgage ratesled to a decline in prepayments Lender Processing Services 4
  5. 5. ‘08-’11 vintages have participated similarly in the recent refi wave Lender Processing Services 5
  6. 6. GNMA & portfolio-owned loans havebeen relatively immune to lower rates Lender Processing Services 6
  7. 7. Focus Point 2: Delinquency Trends• Non-current rates continue to decline, but remain almost 2x pre-crisis levels• 90 day delinquencies continue to improve, but at a slower pace while inventory continues to age• New 90 day delinquencies are improving nationwide, but at a slower pace in judicial states Lender Processing Services 7
  8. 8. Delinquency and foreclosure trends continue to improve Lender Processing Services 8
  9. 9. Improvement in late stage DQs has slowed since 2011 Jan-10 Peak 2.9 million loans 252 avg days DQ Feb-13 22% > 1 year DQ 1.5 million loans 474 avg days DQ 42% > 1 year DQ Lender Processing Services 9
  10. 10. DQs declined for all products since ’10 peak, FCs up only for FHA/VA Lender Processing Services 10
  11. 11. New 90+ day delinquencies in judicialstates are improving at a slower pace Lender Processing Services 11
  12. 12. Focus Point 3: Cure Rates and Modification activity• February and March typically see the highest increase in loan “cures”• This year’s increase was driven almost entirely by FHA / GNMA loans• Modification volumes have begun to increase again over the last six months with recidivism rates remaining relatively low Lender Processing Services 12
  13. 13. There is a seasonal increase incure rates in February and March Lender Processing Services 13
  14. 14. Increase in loan cures was drivenalmost entirely by FHA / GNMA loans Lender Processing Services 14
  15. 15. After 2 years of decline, modificationshave increased for the last 2 quarters Data from Q4 2012 OCC Mortgage Metrics Report Lender Processing Services 15
  16. 16. More recent modificationscontinue to perform well Data from Q4 2012 OCC Mortgage Metrics Report Lender Processing Services 16
  17. 17. Focus Point 4: Default Curves• More restrictive underwriting guidelines have led to extremely low default rates relative to “bubble” vintages• The improvement in recent vintages extends to loans with similar risk attributes• FHA is still supporting lower quality borrowers with higher default rates as a result Lender Processing Services 17
  18. 18. Tighter underwriting reflected in theperformance of 2010-2012 vintages Lender Processing Services 18
  19. 19. Even in high quality cohorts, recent vintages are performing better Lender Processing Services 19
  20. 20. FHA is still supporting the lower credit quality borrowers Wtd Avg Wtd AvgProduct Credit Score LTVFHA 707 92%GSE 762 69%Other 765 63% Lender Processing Services 20
  21. 21. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :Lender Processing Services March 2013 Appendix Data as of February, 2013 Month-end LPS Mortgage Monitor21
  22. 22. February 2013 SummaryFebruary Summary Statistics Monthly Yearly Feb-13 Change YTD Change ChangeDelinquencies 6.80% -3.2% -5.1% -6.5%Foreclosure 3.38% -1.0% -1.8% -19.6%Foreclosure Starts 131,826 -10.7% -3.3% -27.6%Seriously Delinquent (90+) or inForeclosure 6.34% -2.2% -3.1% -16.1%New Originations (data as ofJan-13) 835K 8.1% 15.5% 45.2%12 Month History Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12 May-12 Apr-12 Mar-12 Feb-12Delinquencies 6.80% 7.03% 7.17% 7.12% 7.03% 7.40% 6.87% 7.03% 7.14% 6.91% 6.87% 6.80% 7.28%Foreclosure 3.38% 3.41% 3.44% 3.51% 3.61% 3.87% 4.04% 4.08% 4.09% 4.17% 4.20% 4.19% 4.20%Foreclosure Starts 131,826 147,593 136,289 130,053 124,292 159,078 201,173 185,811 173,556 218,909 183,489 195,128 182,184Seriously Delinquent (90+) or inForeclosure 6.34% 6.48% 6.54% 6.66% 6.71% 6.94% 7.08% 7.19% 7.24% 7.28% 7.34% 7.38% 7.55%New Originations 835K 772K 828K 892K 769K 875K 745K 695K 670K 622K 723K 645K Total Delinquencies New Originations 892K 875K 835K 828K 7.40% 7.28% 772K 769K 7.17% 745K 7.14% 7.12% 723K 7.03% 7.03% 7.03% 695K 670K 6.91% 6.87% 6.87% 645K 6.80% 6.80% 622K Lender Processing Services 22
  23. 23. Seven of the top 10 states for total non-current are judicialState Del % FC % Non-Curr Yr/Yr State Del % FC % Non-Curr Yr/Yr State Del % FC % Non-Curr Yr/Yr % Change % Change % Change in NC% in NC% in NC%National 6.8% 3.4% 10.2% -11.3% National 6.8% 3.4% 10.2% -11.3% National 6.8% 3.4% 10.2% -11.3%FL * 7.3% 11.2% 18.5% -16.1% PA * 7.7% 3.4% 11.0% -0.8% MO 6.9% 1.3% 8.2% -9.5%NJ * 8.0% 8.2% 16.3% 3.0% HI * 5.0% 6.0% 11.0% -7.0% KS * 6.1% 1.7% 7.8% -6.7%MS 13.0% 3.0% 16.0% -6.0% SC * 7.2% 3.6% 10.8% -10.4% OR 4.4% 3.3% 7.7% -9.3%NV 8.8% 5.2% 14.0% -16.3% TN 8.7% 1.5% 10.2% -8.1% UT 5.8% 1.7% 7.5% -11.9%NY * 7.5% 6.0% 13.5% 1.9% WV 8.3% 1.7% 10.1% -3.7% IA * 4.9% 2.6% 7.5% -4.5%ME * 7.0% 5.8% 12.7% 0.4% MA 7.5% 2.4% 9.9% -1.2% CA 5.7% 1.5% 7.3% -25.6%RI 8.5% 4.0% 12.5% -1.2% NC 7.3% 2.3% 9.6% -10.4% ID 4.6% 2.5% 7.0% -11.5%CT * 7.3% 5.0% 12.3% 0.4% OK * 6.3% 3.2% 9.5% -3.6% AZ 5.2% 1.5% 6.7% -31.4%MD * 8.4% 4.0% 12.3% -5.0% VT * 5.3% 3.9% 9.2% 4.2% VA 5.7% 1.0% 6.7% -10.8%LA * 9.5% 2.8% 12.3% -5.0% KY * 6.5% 2.5% 9.0% -10.9% NE * 4.9% 1.1% 5.9% -6.2%IL * 6.7% 5.4% 12.1% -13.7% NM * 5.4% 3.5% 8.9% -8.1% MN 4.1% 1.2% 5.4% -18.6%IN * 7.8% 3.5% 11.3% -7.5% DC 6.4% 2.4% 8.8% -5.4% CO 4.1% 1.0% 5.2% -18.1%AR 8.3% 3.0% 11.3% 2.0% WI * 6.0% 2.7% 8.8% -10.4% MT 3.6% 1.3% 4.9% -15.5%GA 9.2% 2.0% 11.2% -12.8% WA 5.8% 2.8% 8.5% -10.7% WY 4.0% 0.7% 4.7% -6.5%OH * 7.5% 3.7% 11.1% -9.1% MI 7.0% 1.5% 8.5% -14.4% AK 3.8% 0.8% 4.7% -8.9%AL 9.5% 1.5% 11.1% -3.1% TX 7.1% 1.2% 8.3% -8.2% SD * 3.1% 1.3% 4.3% -9.7%DE * 7.8% 3.2% 11.0% -1.2% NH 6.6% 1.6% 8.2% -4.1% ND * 2.3% 0.9% 3.2% -13.5%* - Indicates Judicial State Average year over year change in non-current percent (includes loans 30+ Delinquent or in Foreclosure) Judicial = -10.5% Non-judicial = -5.8% Lender Processing Services 23
  24. 24. Short month contributed to adecline in foreclosure starts and sales Lender Processing Services 24
  25. 25. Originations rebounded in January Lender Processing Services 25
  26. 26. ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions Lender Processing Services 26
  27. 27. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 27
  28. 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. 29. With 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 29
  30. 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. 31. New scaling reflects the higher coverage of governmentloans and allows for the incorporation of new servicers Lender Processing Services 31
  32. 32. Delinquencies decline based on higherestimated coverage of FHA and subprime loans. Converge due to new servicers and transfer issues with prior scaling Lender Processing Services 32
  33. 33. Foreclosure inventory remains almost identical, butshifts up in recent months as transfer bias is repaired Lender Processing Services 33
  34. 34. Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 34
  35. 35. Performance Statistics Changes: Database Counts Lender Processing Services 35
  36. 36. Performance Statistics Changes: State Level Detail Lender Processing Services 36

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