Foreclosure Starts & Higher Nonperforming Assets
Foreclosure starts continue to accelerate with the GSEs displaying more aggressive timelines on early-stage delinquencies.
By the end of August, there had been more than 2 million foreclosure starts, while delinquencies during that same time period dropped 5.1% compared to a year ago, according to the August Mortgage Monitor report by Lender Processing Services Inc.
Breaking the trend of the last three months, agency foreclosure starts declined slightly in August. However, portfolio foreclosure starts have accelerated.
LPS says late-stage delinquencies dominate these new foreclosure starts, though overall the percentage of seriously delinquent loans not in foreclosure is improving as compared to the extreme distress seen last year.
Data also show refinance activity is picking up again as prepayment rates have been steadily increasing over the last two months and new originations hit 2010 highs.
States with most noncurrent loans included Florida, Nevada, Mississippi, Georgia and Illinois. The states with the fewest noncurrent loans were North Dakota, South Dakota, Alaska, Wyoming and Montana.
In today’s current environment, developers and builders are teaming up with Charlotte, N.C.-based Mountain Real Estate Capital to identify and purchase distressed property. MREC has closed its second REO/nonperforming loan acquisition from Bank of America in the last three months.
Not only does the company purchase troubled assets, but it recapitalizes tier one capital for banks which may facilitate an acquisition by offsetting the effect of NPL/REO capital writedowns.
Most of the group is comprised of former GMAC REO managers who have been responsible for disposition of over 32,000 lots and homes valued at over $2 billion for GMAC ResCap’s business capital group. They currently manage $1 billion of various residential and commercial assets for MREC.