Mortgage loan delinquencies declined marginally in February, but seasonality should have had a much greater impact, according to Lender Processing Services Inc.'s March 2009 LPS Mortgage Monitor.
The monthly report, which summarizes mortgage industry performance indicators based on data from the company's repository of loan-level residential mortgage data and performance information, found that the decrease in delinquencies from December 2008 through February 2009 was only 1%. In prior years, the December-to-February decrease in delinquencies has averaged 6.5%.
Foreclosure starts and inventories continue to increase across all products and investors despite moratoria and loss mitigation efforts, LPS notes. Starts have hit all-time highs across all prime and Alt-A products, and subprime is the only product for which starts declined in February.
Over a 12-month time frame, foreclosure starts increased 128% for non-agency conforming loans, 134% for agency loans and 150% for jumbo loans. These numbers demonstrate a dramatic acceleration in the pace of non-agency jumbo and agency foreclosure starts, says LPS.
Foreclosure inventories also continued to climb, with February showing the largest single-month percentage increase since December 2007. The February 2009 foreclosure rate was 2.23%, a month-over-month increase of 8.20% and a year-over-year increase of over 75%.
The moratorium on Fannie Mae and Freddie Mac foreclosure sales expired Jan. 31 and was reinstated Feb. 13 to continue through the end of March. During the two-week period when the moratorium was lifted, agency foreclosure sales approached all-time highs.
Further, recidivism rates show no signs of improvement in the quality of modifications during the fourth quarter of 2008, LPS says, as rates still exceed 50% six months post-modification. Prepayments have continued to increase significantly, but refinance liquidity is concentrated most in borrowers who need help least.