The completion of the foreclosure process in judicial states rose to their highest point in two years, contributing to an overall decline in foreclosure inventories nationwide, Lender Processing Services said in its April Mortgage Monitor report.
The foreclosure sale rate in judicial states increased 16.87% from March to April. The rate has not been this much since the fall of 2010 when the moratoria and process reviews almost shut down the foreclosure process for all states.
However, Herb Blecher, senior vice president of the applied analytics group at Lender Processing Services, said the return to a degree of normality in the foreclosure sale rate does not fully resolve this situation, as foreclosure inventories in judicial states are still more than three times those in nonjudicial states.
Furthermore, on a national level, the total U.S. presale foreclosure inventory rate is 3.17%, which is seven times greater than pre-crisis levels.
“Nonjudicial states were relatively quick to bounce back, but judicial states experienced a much slower, though steady, increase,” Blecher stated. “This has helped drive an overall decline in foreclosure inventory at the national level, which is now at 3.2%—its lowest point in four years.”
Other highlights from the Jacksonville, Fla.-based company’s report is that refinance activity remained elevated as interest rates stay near record lows. In particular, loan vintages from 2009 and earlier are prepaying at historically high speeds because borrowers are selling their homes to take advantage of rising property values or refinancing through the Home Affordable Refinance Program.
In addition, liquidity for borrowers with lower credit scores (under 720) has increased between 20% and 30% on a year-over-year basis, compared to just 7% for those with scores above 720.
Despite more recent loan vintages showing potential “burnout” signs with borrowers having already taken advantage of low interest rates, LPS found that approximately 18% of outstanding loans, or 9 million borrowers, can still benefit from refinancing.