Overdues Seeing An Improvement
Jacksonville, FL-Based on data collected as of June 30 by Lender Processing Services Inc., new delinquencies dropped to their second lowest level in the last year. And the percentage of loans rolling to a more delinquent status declined across all product types.
Although market conditions remain challenging, these findings from the June LPS Mortgage Monitor could be indications that the nation's housing market may be turning a corner toward recovery.
In its report, Lender Processing Services, a provider of integrated mortgage technology, also said the gap between loans improving and loans deteriorating narrowed slightly.
Total loan originations for the first half of 2009 were higher than 2008 levels for the same period.
Loan originations from January to June were 2,333,451 compared to 2,211,852 from January to June 2008.
Several factors appear to be contributing to improvements in the housing market. First, at current interest rates there is a lower risk of increased defaults associated with outstanding hybrid adjustable-rate mortgage resets.
"Second, liquidity is becoming increasingly available again to borrowers who are in some stage of delinquency," LPS said.
"A dramatic improvement in borrower credit quality has created a significant decline in first-payment defaults. Finally, the impact of homeowner aid programs, most notably the federal government's Making Home Affordable program, may be contributing to the resolution of many delinquent loans in the pipeline."
According to the LPS Mortgage Monitor, there are still a large number of toxic loans expected to move through the pipeline.
The report said positive trends were tempered by a continuation of disappointing results from much of the nation. Foreclosure inventories continued to climb to record highs, while noncurrent loans, including defaults and foreclosures, rose to 11.44%.
Foreclosure starts in June increased 1.6% to the second-highest level on record, while reinstatement and recidivism rates are not yet showing signs of improvement, said LPS.
Jumbo prime loans continue to experience the highest rates of deterioration, with jumbo prime foreclosure rates up 580% since January 2008.
The total U.S. loan delinquency rate was 8.58%, a month-to-month increase of 1.1% and a year-to-year increase of 44%, said LPS.
June's foreclosure rate was 2.86%, a month-to-month increase of 2.5% and a year-to-year increase of 86.1%.
States with the most noncurrent loans include Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Michigan, Ohio and West Virginia.