Monday, July 08, 2013

LPS: Large Decline in Mortgage Delinquencies, U.S. Negative Equity Share Falls Below 15 Percent

by Bill McBride on 7/08/2013 08:35:00 AM

LPS released their Mortgage Monitor report for May today. According to LPS, 6.08% of mortgages were delinquent in May, down from 6.21% in April.

LPS reports that 3.05% of mortgages were in the foreclosure process, down from 4.12% in May 2012.

This gives a total of 9.13% delinquent or in foreclosure. It breaks down as:

• 1,708,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,335,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,525,000 loans in foreclosure process.

For a total of ​​4,469,000 loans delinquent or in foreclosure in May. This is down from 5,605,000 in May 2012.

Delinquency Rate Click on graph for larger image.

The first graph from LPS shows percent of loans delinquent and in the foreclosure process over time.

From LPS:

The May Mortgage Monitor report released by Lender Processing Services found that the national delinquency rate continued to fall in May, marking the largest year-to-date drop since 2002. Delinquencies are down more than 15 percent since the end of December 2012, coming in at 6.08 percent for the month. As LPS Applied Analytics Senior Vice President Herb Blecher explained, much of this improvement is supported by the fact that new problem loan rates are approaching the pre-crisis average.

“Though they are still approximately 1.4 times what they were, on average, during the 1995 to 2005 period, delinquencies have come down significantly from their January 2010 peak,” Blecher said. “In large part, this is due to the continuing decline in new problem loans -- as fewer problem loans are coming into the system, the existing inventories are working their way through the pipeline. New problem loan rates are now at just 0.73 percent, which is right about on par with the annual averages during 2005 and 2006, and extremely close to the 0.55 percent average for the 2000-2004 period preceding.
LPS Mortgage MonitorThe second graph shows the percent of loans with negative equity. From LPS:
“As we’ve noted before,” Blecher continued, “negative equity appears to still be one of the strongest drivers of new problem loans, and -- primarily buoyed by home price increases nationwide -- that situation also continues to improve. We looked once again at the number of ‘underwater’ loans in the U.S., and found that the total share of mortgages with LTVs of greater than 100 percent had declined to just 7.3 million loans as of the end of the first quarter of 2013. This accounts for less than 15 percent of all currently active loans and represents a nearly 50 percent year-over-year decline.”
There is much more in the mortgage monitor.

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