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