lps mortgage monitor - february 2013
DESCRIPTION
March 2013 Mortgage Performance Observations; Data as of February, 2013 Month-endTRANSCRIPT
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LPS Mortgage Monitor
March 2013 Mortgage Performance Observations
Data as of February, 2013 Month-end
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• Focus 1: Prepayment rates with vintage and
product view
• Focus 2: Delinquency trends and late stage
focus
• Focus 3: Loan “cure” rates and modification
activity
• Focus 4: Performance by vintage - default
curves
February 2013 Focus Points
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• Increased mortgage rates have led to a
slight decline in loan prepayments
• Recent vintages are reacting similarly during
this refinance wave
• GNMA and portfolio loans have been
relatively unreactive to lower interest rates
Focus Point 1: Prepayment Rates
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Increased mortgage rates
led to a decline in prepayments
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‘08-’11 vintages have participated
similarly in the recent refi wave
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GNMA & portfolio-owned loans have
been relatively immune to lower rates
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• Non-current rates continue to decline, but
remain almost 2x pre-crisis levels
• 90 day delinquencies continue to improve,
but at a slower pace while inventory
continues to age
• New 90 day delinquencies are improving
nationwide, but at a slower pace in judicial
states
Focus Point 2: Delinquency Trends
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Delinquency and foreclosure
trends continue to improve
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Improvement in late stage DQs
has slowed since 2011
Feb-13
1.5 million loans
474 avg days DQ
42% > 1 year DQ
Jan-10 Peak
2.9 million loans
252 avg days DQ
22% > 1 year DQ
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DQs declined for all products since
’10 peak, FCs up only for FHA/VA
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New 90+ day delinquencies in judicial
states are improving at a slower pace
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• February and March typically see the
highest increase in loan “cures”
• This year’s increase was driven almost
entirely by FHA / GNMA loans
• Modification volumes have begun to
increase again over the last six months with
recidivism rates remaining relatively low
Focus Point 3: Cure Rates and
Modification activity
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There is a seasonal increase in
cure rates in February and March
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Increase in loan cures was driven
almost entirely by FHA / GNMA loans
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After 2 years of decline, modifications
have increased for the last 2 quarters
Data from Q4 2012 OCC Mortgage Metrics Report
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More recent modifications
continue to perform well
Data from Q4 2012 OCC Mortgage Metrics Report
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• More restrictive underwriting guidelines
have led to extremely low default rates
relative to “bubble” vintages
• The improvement in recent vintages extends
to loans with similar risk attributes
• FHA is still supporting lower quality
borrowers with higher default rates as a
result
Focus Point 4: Default Curves
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Tighter underwriting reflected in the
performance of 2010-2012 vintages
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Even in high quality cohorts, recent
vintages are performing better
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FHA is still supporting the lower
credit quality borrowers
Product
Wtd Avg
Credit Score
Wtd Avg
LTV
FHA 707 92%
GSE 762 69%
Other 765 63%
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LPS Mortgage Monitor
March 2013 Appendix
Data as of February, 2013 Month-end
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February 2013 Summary February Summary Statistics
Feb-13
Monthly
Change YTD Change
Yearly
Change
Delinquencies 6.80% -3.2% -5.1% -6.5%
Foreclosure 3.38% -1.0% -1.8% -19.6%
Foreclosure Starts 131,826 -10.7% -3.3% -27.6%
Seriously Delinquent (90+) or in
Foreclosure 6.34% -2.2% -3.1% -16.1%
New Originations (data as of
Jan-13) 835K 8.1% 15.5% 45.2%
12 Month History
Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12 May-12 Apr-12 Mar-12 Feb-12
Delinquencies 6.80% 7.03% 7.17% 7.12% 7.03% 7.40% 6.87% 7.03% 7.14% 6.91% 6.87% 6.80% 7.28%
Foreclosure 3.38% 3.41% 3.44% 3.51% 3.61% 3.87% 4.04% 4.08% 4.09% 4.17% 4.20% 4.19% 4.20%
Foreclosure Starts 131,826 147,593 136,289 130,053 124,292 159,078 201,173 185,811 173,556 218,909 183,489 195,128 182,184
Seriously Delinquent (90+) or in
Foreclosure 6.34% 6.48% 6.54% 6.66% 6.71% 6.94% 7.08% 7.19% 7.24% 7.28% 7.34% 7.38% 7.55%
New Originations 835K 772K 828K 892K 769K 875K 745K 695K 670K 622K 723K 645K
7.28
%
6.80
%
6.87
%
6.9
1%
7.14
%
7.03
%
6.87
%
7.4
0%
7.0
3%
7.12
%
7.1
7%
7.03
%
6.80
%
Total Delinquencies
64
5K
72
3K
622K
670K
695K
745K 87
5K
769K 89
2K
82
8K
772K
835K
New Originations
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Seven of the top 10 states for total
non-current are judicial
Average year over year change in non-current percent
(includes loans 30+ Delinquent or in Foreclosure)
Judicial = -10.5% Non-judicial = -5.8%
State Del % FC % Non-Curr
%
Yr/Yr
Change
in NC%
State Del % FC % Non-Curr
%
Yr/Yr
Change
in NC%
State Del % FC % Non-Curr
%
Yr/Yr
Change
in NC%
National 6.8% 3.4% 10.2% -11.3% National 6.8% 3.4% 10.2% -11.3% National 6.8% 3.4% 10.2% -11.3%
FL * 7.3% 11.2% 18.5% -16.1% PA * 7.7% 3.4% 11.0% -0.8% MO 6.9% 1.3% 8.2% -9.5%
NJ * 8.0% 8.2% 16.3% 3.0% HI * 5.0% 6.0% 11.0% -7.0% KS * 6.1% 1.7% 7.8% -6.7%
MS 13.0% 3.0% 16.0% -6.0% SC * 7.2% 3.6% 10.8% -10.4% OR 4.4% 3.3% 7.7% -9.3%
NV 8.8% 5.2% 14.0% -16.3% TN 8.7% 1.5% 10.2% -8.1% UT 5.8% 1.7% 7.5% -11.9%
NY * 7.5% 6.0% 13.5% 1.9% WV 8.3% 1.7% 10.1% -3.7% IA * 4.9% 2.6% 7.5% -4.5%
ME * 7.0% 5.8% 12.7% 0.4% MA 7.5% 2.4% 9.9% -1.2% CA 5.7% 1.5% 7.3% -25.6%
RI 8.5% 4.0% 12.5% -1.2% NC 7.3% 2.3% 9.6% -10.4% ID 4.6% 2.5% 7.0% -11.5%
CT * 7.3% 5.0% 12.3% 0.4% OK * 6.3% 3.2% 9.5% -3.6% AZ 5.2% 1.5% 6.7% -31.4%
MD * 8.4% 4.0% 12.3% -5.0% VT * 5.3% 3.9% 9.2% 4.2% VA 5.7% 1.0% 6.7% -10.8%
LA * 9.5% 2.8% 12.3% -5.0% KY * 6.5% 2.5% 9.0% -10.9% NE * 4.9% 1.1% 5.9% -6.2%
IL * 6.7% 5.4% 12.1% -13.7% NM * 5.4% 3.5% 8.9% -8.1% MN 4.1% 1.2% 5.4% -18.6%
IN * 7.8% 3.5% 11.3% -7.5% DC 6.4% 2.4% 8.8% -5.4% CO 4.1% 1.0% 5.2% -18.1%
AR 8.3% 3.0% 11.3% 2.0% WI * 6.0% 2.7% 8.8% -10.4% MT 3.6% 1.3% 4.9% -15.5%
GA 9.2% 2.0% 11.2% -12.8% WA 5.8% 2.8% 8.5% -10.7% WY 4.0% 0.7% 4.7% -6.5%
OH * 7.5% 3.7% 11.1% -9.1% MI 7.0% 1.5% 8.5% -14.4% AK 3.8% 0.8% 4.7% -8.9%
AL 9.5% 1.5% 11.1% -3.1% TX 7.1% 1.2% 8.3% -8.2% SD * 3.1% 1.3% 4.3% -9.7%
DE * 7.8% 3.2% 11.0% -1.2% NH 6.6% 1.6% 8.2% -4.1% ND * 2.3% 0.9% 3.2% -13.5%
* - Indicates Judicial State
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Short month contributed to a
decline in foreclosure starts and sales
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Originations rebounded in January
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LPS Mortgage Monitor
Disclosures: Product / Metric Definitions and
July 2012 Market Sizing Revisions
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Disclosure Page: Product Definitions
*Conforming limits do not account for temporary or high-cost area
increases.
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Disclosure Page: Metrics Definitions
• Total Active Count: All active loans as of month-end including loans in any state of
delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total
active count.
• Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using
the MBA methodology based on the payment due date provided by the servicer. Loans in
foreclosure are reported separately and are not included in the MBA days delinquent.
• 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and
were 90 days delinquent, but not in foreclosure, in the current month.
• Foreclosure Inventory: The servicer has referred the loan to an attorney for
foreclosure. Loans remain in foreclosure inventory from referral to sale.
• Foreclosure Starts – Any active loan that was not in foreclosure in the prior month that
moves into foreclosure inventory in the current month.
• Non-Current: Loans in any stage of delinquency or foreclosure.
• Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that
moves into post-sale status or is flagged as a foreclosure liquidation.
• REO: The loan is in post-sale foreclosure status. Listing status is not a consideration,
this includes all properties on and off the market.
• Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency
status vs. those improving.
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With the June 2012 month-end data, LPS has updated its
extrapolation methodology to incorporate, among other
things, improved estimates of market size, which includes
higher coverage of government and subprime products and
increases LPS’ estimate of the total first lien residential
mortgage market by three percent to 50.4 million.
To ensure consistency in trend analysis, the new
methodology has been applied to all historical data and
previously reported mortgage performance statistics have
been adjusted accordingly.
The following section contains information on market
coverage and comparisons with previously reported
statistics. Additional information is available upon request.
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The new scaling increases overall estimated industry
loan count by approximately 1.2 million loans
Prior industry estimates declined
because scaling didn’t support
current servicing transfer volumes
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New scaling reflects the higher coverage of government
loans and allows for the incorporation of new servicers
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Delinquencies decline based on higher
estimated coverage of FHA and subprime loans.
Converge due to new
servicers and transfer
issues with prior scaling
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Foreclosure inventory remains almost identical, but
shifts up in recent months as transfer bias is repaired
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Foreclosure starts remain consistent, with
rates shifting up slightly
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Performance Statistics Changes: Database Counts
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Performance Statistics Changes: State Level Detail