Late-Stage Delinquencies Lead Rise In FC Starts

The July Mortgage Monitor report released by Lender Processing Services Inc. (LPS) shows that foreclosure starts are on the rise, with seriously delinquent loans – those six or more months delinquent – dominating new foreclosure actions.

The increase in foreclosure starts is consistent with the U.S. Treasury Department's latest report that approximately half of all Home Affordable Modification Program (HAMP) trial modifications resulted in cancellation, though 45.4% of those have resulted in alternative (i.e., non-HAMP) modifications.

Delinquent and foreclosure inventories continue to stabilize but have yet to show annual declines, LPS says. The total U.S. loan delinquency rate through July was 9.33%, and the total foreclosure inventory rate was 3.75%. The rates combine for a total non-current loan rate of 13.08%.

Continuing the trend from June, agency prime loans have seen the greatest month-over-month increase in foreclosure inventory and the second-highest percentage increase since January 2009. Only non-agency jumbo prime loans have experienced a greater increase during the same period, but the month-over-month results indicate that this inventory has begun to decline, LPS says.

The report also shows that approximately 895,000 loans that were current at the beginning of January are at least 60 days delinquent or in foreclosure as of the end of July – a month-over-month increase of 120,000 loans.

Cure rates remain steady overall, but seriously delinquent cures have declined significantly, by approximately 25%, which is consistent with the decline in permanent modifications established during the month of July.

SOURCE: Lender Processing Services


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