The housing industry’s recovery efforts are progressing through May as mortgage delinquencies have decreased 43% from their 2010 peak, according to Lender Processing Services’ May mortgage monitor report.
Since the beginning of 2013 to the end of May, delinquencies are down over 15% with a current mark of 6.08%, which
Herb Blecher, senior vice president of applied analytics at Lender Processing Services, said much of this improvement is due to new problem loan rates are now approaching the pre-crisis average.
“As fewer problem loans are coming into the system, the existing inventories are working their way through the pipeline,” Blecher stated. “New problem loan rates are now at just 0.73%, which is right about on par with the annual averages during 2005 and 2006, and extremely close to the 0.55% average for the 2000-2004 period preceding.”
Meanwhile, negative equity—one of the main drivers that leads a borrower to default on their mortgage loan—has also experienced improvements as home prices have increased throughout the nation over the last year.
The number of underwater borrowers fell by 47% from the first quarter of 2012 to 1Q 13, LPS said, and account for only 14.7% of all active loans. LPS also found that the total share of mortgages with LTVs of greater than 100% had declined to 7.3 million loans as of the end of March, which is down from a high of 17 million just two years ago.
Furthermore, negative equity in the “sand states” got better on a yearly basis. For example, Arizona was down 53% to 18.1%, California had a 51% drop to 15.6%, Florida fell 34% to 29.8% and Nevada saw a 49% decrease to 32.7%.
Another highlight from the LPS monthly report is that 2013 origination activity remained strong through April with 835,000 new loans, which is up on a monthly and yearly basis by 1.8% and 34.1%, respectively. For the year, 3.2 million loans have been originated.
Additionally, despite mortgage rates increasing, prepayment data indicate higher May refinance activity.
Also, recent vintages continue to display good credit quality and performance. The weighted average credit score for 2013 originations is 754. Between 2007 and 2008, this figure was in the low 700s.
