LPS Mortgage Monitor - October 2012

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LPS' October Mortgage Monitor: Foreclosure Starts Down
Decline Likely Temporary as Industry Adapts to New National Mortgage Settlement Requirements

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LPS Mortgage Monitor - October 2012

  1. 1. WERFUL SOLUTIO . : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor November 2012 Mortgage Performance Observations ONS Data as of October, 2012 Month-endONE SOURCE. POW E Lender Processing Services 1
  2. 2. October 2012 Focus Points• Focus 1: September delinquency spike reversed in p q y p October; foreclosures down due to National Mortgage Settlement (“NMS”)• Focus 2: Largest YoY house price increase since 2006; low total sales with high % of distressed g• Focus 3: Originations still relatively strong despite Sept drop; non government share increasing non-government• Focus 4: State specific legislation is impacting foreclosure processes beyond judicial vs non vs. non- judicial distinction Lender Processing Services 2
  3. 3. Focus 1 Summary: Monthly Mortgage Performance• Delinquencies down; September payment issues related to short month resolved• Foreclosure starts down sharply due to NMS; associated drop in foreclosure inventory• Longer term DQ and FC trends improving – Delinquencies >30% lower than Jan-10 peak – Watch foreclosure activity over the coming months Lender Processing Services 3
  4. 4. DQs in-line with seasonal trends; FCs down almost 7% due to lower starts Early stage “self” cures and modification dominated late stage cures drove drop in DQs (Appendix, Slide 18) Lender Processing Services 4
  5. 5. NMS drove a drop in FC starts; expect a rebound in coming months Settlement requires 14 day notice to borrowers prior to referral; letters were sent in September and October Lender Processing Services 5
  6. 6. Focus 2 Summary: HPI and Home Sales• House prices continue to rise nationally; on pace for 5-7% YoY appreciation by Dec-12• Overall sales volumes remain low with distressed transactions at historic highs• O Over th prior 12 months: the i th – 4.07 million total transactions – REOs = 16.1% (656k) – Short Sales = 16.2% (661k) Lender Processing Services 6
  7. 7. LPS HPI up 3.6% year over year 3 6%National houseprices are down22.8% from theJune 2006 peakJ k Lender Processing Services 7
  8. 8. Almost one third of all transactionsover the prior year were distressed12 month sales peakedat 8.2 million in Nov-05 (260k distressed) 12 months through Sep-12 g p 4.1 million total sales (1.3 million distressed) Lender Processing Services 8
  9. 9. Focus 3 Summary: Originations and Characteristics• Originations fell in September due to shortened month, but expect a rebound based on October prepayments• Non-government originations continue to rise• Mortgage spreads continue to be wide; FHA still supporting hi h t risk b till ti highest i k borrowers Lender Processing Services 9
  10. 10. Sept originations dropped with shortmonth; higher Private / Portfolio share Private / Portfolio Share 2009: 9% 2010: 11% 2011: 13% 2012: 16% Lender Processing Services 10
  11. 11. Mortgage spreads remain elevated; rates consistent across product138 bps p 197 bps Lender Processing Services 11
  12. 12. Focus 4 Summary: Foreclosure process disparities and impacts• State specific actions / legislation have had significant impact on pipeline ratios – Maryland Hawaii Arkansas and Nevada are Maryland, Hawaii, examples – California Homeowners Bill of Rights goes into effect in January• Large differences persist in judicial and non- judicial foreclosure timelines and inventory over-hang Lender Processing Services 12
  13. 13. Impact of FC reform in NV lower vs.other states; CA to change in Jan-13 NV pipeline ratio has doubled since Oct-11 FC reform law; CA Homeowner’s Bill of Rights begins Jan-13 Lender Processing Services 13
  14. 14. FC inventory in judicial states remains over 3x non-judicialSeven of the top 10 states for total non-current are judicial (Appendix, slide 17) Lender Processing Services 14
  15. 15. ONE SOURCE. POW E ONS WERFUL SOLUTIO . : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :Lender Processing Services November 2012 Appendix Data as of October, 2012 Month-end LPS Mortgage Monitor15
  16. 16. October 2012 Data Dashboard Lender Processing Services 16
  17. 17. Seven of the top 10 states for total non-current are judicial Average year over year change in non-current percent (includes loans 30+ Delinquent or in Foreclosure) Judicial = -5.0% Non-judicial = -10.4% Lender Processing Services 17
  18. 18. Cures jumped with October “make- up” payments and modifications Lender Processing Services 18
  19. 19. FC sales maintained stable nationaltrend while starts dropped sharply Lender Processing Services 19
  20. 20. Drop in foreclosure starts supported a drop in overall inventory Lender Processing Services 20
  21. 21. Prepayment speeds rebounded inOctober indicating more originations Lender Processing Services 21
  22. 22. WERFUL SOLUTIO . : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : LPS Mortgage Monitor Disclosures: Product / Metric Definitions and ONS July 2012 Market Sizing RevisionsONE SOURCE. POW E Lender Processing Services 22
  23. 23. Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 23
  24. 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 q y 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 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. L f l Loans remain i f i in foreclosure i l inventory f t from referral t sale. f l to l• 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. y g q y• 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 market.• Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving. Lender Processing Services 24
  25. 25. With the June 2012 month-end data LPS has updated its month end data,extrapolation methodology to incorporate, among otherthings, improved estimates of market size, which includeshigherhi h coverage of government and subprime products and f t d b i d t dincreases 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 25
  26. 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 Lender Processing Services 26
  27. 27. New scaling reflects the higher coverage of governmentloans and allows for the incorporation of new servicers Lender Processing Services 27
  28. 28. 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 28
  29. 29. Foreclosure inventory remains almost identical, butshifts up in recent months as transfer bias is repaired Lender Processing Services 29
  30. 30. Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 30
  31. 31. Performance Statistics Changes: Database Counts Lender Processing Services 31
  32. 32. Performance Statistics Changes: State Level Detail Lender Processing Services 32

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