by Calculated Risk on 12/01/2011 11:33:00 AM

From LPS Applied Analytics: LPS' Mortgage Monitor Report Shows Delinquencies Down Nearly 30 Percent from Peak, Foreclosure Inventory at an All-Time High

The October Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows mortgage delinquencies continue their decline, now nearly 30 percent off their January 2010 peak. Meanwhile, foreclosure inventories are on the rise, reaching an all-time high at the end of October of 4.29 percent of all active mortgages. The average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.

Judicial vs. non-judicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from state to state, with non-judicial foreclosure inventory percentages less than half that of judicial states. ...

The October data also showed that mortgage originations are on the rise, reaching levels not seen since mid-2010. Mortgage prepayment rates have also spiked, as much of the new origination is related to borrower refinancing ...

According to LPS, 7.93% of mortgages were delinquent in October, down from 8.09% in September, and down from 9.29% in October 2010.

LPS reports that a record 4.29% of mortgages were in the foreclosure process, up from 4.18% in September, and up from 3.92% in October 2010. This gives a total of 12.22% delinquent or in foreclosure. It breaks down as:

• 2.33 million loans less than 90 days delinquent.
• 1.76 million loans 90+ days delinquent.
• 2.21 million loans in foreclosure process.

For a total of 6.30 million loans delinquent or in foreclosure in October.

Click on graph for larger image.

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

The total delinquent rate has fallen to 7.93% from the peak in January 2010 of 10.97%. A normal rate is probably in the 4% to 5% range, so there is a long ways to go.

However the in-foreclosure rate at 4.29% is a new record high. There are still a large number of loans in this category (about 2.21 million) - and the average days delinquent for loans in foreclosure set a "new record of 631 days since last payment" in October.

This graph provided by LPS Applied Analytics shows foreclosure inventories by process.

As LPS noted "Judicial vs. non-judicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from state to state, with non-judicial foreclosure inventory percentages less than half that of judicial states. This is largely a result of the fact that foreclosure sale rates in non-judicial states have been proceeding at four to five times that of judicial. Non-judicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in non-current loans percentages."

The third graph shows the origination percentage by product and year. This is a reminder that the worst of the worst loans were private label and were made in 2005 and 2006. Luckily the GSEs and FHA had a much smaller percentage of the market then.

As LPS notes: "FHA and the GSEs represent a much larger share, but of a smaller market."

The details in this report suggest slow improvement - with the exception of the large number of loans stuck in the foreclosure process.
All current mortgage delinquency graphs

Earlier:
• ISM Manufacturing index indicates slightly faster expansion in November

by Calculated Risk on 12/01/2011 10:00:00 AM

PMI was at 52.7% in November, up from 50.8% in October. The employment index was at 51.8%, down from 53.5%, and new orders index was at 56.7%, up from 52.4%.

From the Institute for Supply Management: November 2011 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in November for the 28th consecutive month, and the overall economy grew for the 30th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 52.7 percent, an increase of 1.9 percentage points from October's reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month. The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the second month of growth after three months of contraction. While the Prices Index, at 45 percent, increased 4 percentage points from the October reading of 41 percent, prices of raw materials continued to decrease (registering below 50 percent) for the second consecutive month. Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders."

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was above expectations of 51.7%, and suggests manufacturing expanded at a slightly faster rate in November than in October. It appears manufacturing employment barely expanded in October with the employment index at 51.8%. New orders were up, and prices declined.

by Calculated Risk on 12/01/2011 08:30:00 AM

The DOL reports:

In the week ending November 26, the advance figure for seasonally adjusted initial claims was 402,000, an increase of 6,000 from the previous week's revised figure of 396,000. The 4-week moving average was 395,750, an increase of 500 from the previous week's revised average of 395,250.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 395,750.

This is the third week in a row with the 4-week average below 400,000. This is still elevated, but an improvement over recent months.

And here is a long term graph of weekly claims:





All current Employment Graphs

by Calculated Risk on 11/30/2011 09:45:00 PM

The post title is from a post Michael Pettis wrote last year: Beijing’s stop-and-go measures. It looks like China is back to pushing on the gas pedal ...

From the NY Times: China, in Surprising Shift, Takes Steps to Spur Bank Lending

China’s central bank, in a surprise move on Wednesday, shifted its economic focus from fighting inflation to stimulating growth by freeing the nation’s commercial banks to lend more money.
...
For more than a year, the Chinese central bank tried to squeeze the country’s banking system in hopes of restraining inflation. Its action on Wednesday’s indicated that China’s government feared the country’s growth engine was starting to falter.

From Reuters: China Factory Sector Shrinks First Time in Nearly 3 Years

China's factory sector shrank in November for the first time in nearly three years, an official purchasing managers' index (PMI) showed on Thursday, underlining the central bank's move to cut bank reserve requirements to shore up the economy.

The Asian markets are all green tonight. The Nikkei is up about 2%, the Hang Seng is up 5.4%.

by Calculated Risk on 11/30/2011 05:27:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate was unchanged at 4.00% in October. This is down from 4.52% in October of 2010. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate increased to 3.54% in October, up from 3.51% in September. This is down from 3.82% in October 2010. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

Tracking this on a monthly basis this is kind of like watching grass grow, but the serious delinquency rates are generally falling - but only falling slowly. The reason for the slow decline is most likely the backlog of homes in the foreclosure process.

The "normal" serious delinquency rate is under 1%, and at this pace of decline, the delinquency rate will not be back to "normal" for a number of years.

All current mortgage delinquency graphs