Thursday, November 08, 2012

LPS: Mortgage Delinquency Rates increased in September

by Bill McBride on 11/08/2012 02:17:00 PM

LPS released their Mortgage Monitor report for September today. According to LPS, 7.40% of mortgages were delinquent in September, up from 6.87% in August, and down from 7.72% in September 2011.

LPS reports that 3.87% of mortgages were in the foreclosure process, down from 4.04% in August, and down from 4.18% in September 2011.

This gives a total of 11.27% delinquent or in foreclosure. It breaks down as:

• 2,170,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,530,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,940,000 loans in foreclosure process.

For a total of ​​5,640,000 loans delinquent or in foreclosure in August. This is up from 5,450,000 last month, and down from 6,130,000 in September 2011.

This following graph shows the total delinquent and in-foreclosure rates since 1995.

Delinquency Rate Click on graph for larger image.

The total delinquency rate has generally been trending down, although there was a pretty sharp increase in September.

 Note: A normal rate is probably in the 4% to 5% range, so there is a long ways to go.

The in-foreclosure rate was at 3.87%. There are still a large number of loans in this category (about 1.9 million), but it appears this is starting to decline.

LPS Mortgage MonitorThe second graph (slide 18 from LPS) shows the number of delinquencies by stage.

From LPS:

The September Mortgage Monitor report released by Lender Processing Services looked at the significant month-over-month increase in the nation’s delinquency rates – up 7.7 percent from August, and representing the largest monthly increase since 2008. While September has historically been marked by seasonal rises in delinquencies, this was still a marked upturn. However, according to LPS Applied Analytics Senior Vice President Herb Blecher, it is important to view the month’s data in its proper context.

“September’s increase in the delinquency rate was indeed significant, but the overall trend is still one of improvement,” Blecher said. “Despite the monthly jump, delinquencies are down 30 percent from their January 2010 peak, and our analysis revealed some interesting factors related to the spike. Of course, one month’s data does not indicate a trend. We will be monitoring these factors over the coming months to see how the situation develops.”

Blecher continued, “September 2012 was notable in its short duration of business days and virtually all transactional or operational metrics we observed declined in volume for the month; foreclosure starts, foreclosure sales, delinquent cures and loan prepayments all dropped from their August levels. It is important to note that we also saw the percentage of re-defaulting modifications contributing to the delinquency rate actually declined from the month prior.”
As Blecher notes, this is just one month of data, and there might be some seasonal issues.

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