The national foreclosure inventory dropped to 3.51% in November, according to new data from Jacksonville, Fla.-based Lender Processing Services (LPS).
According to LPS, November's data represents an almost 10% decline from September 2012, when newly instituted National Mortgage Settlement requirements began to influence the pace of first-time foreclosure starts. LPS expects foreclosure starts to rebound as mortgage servicers incorporate the new procedural requirements into their operations in the coming months.
‘Comparing interest rates on new versus paid-off loans, we see that interest rates on the former are 1.5 percentage points below the latter,’ says Herb Blecher, senior vice president at LPS Applied Analytics. ‘With prepayment activity being as high as it is – two percent of total outstanding U.S. mortgage balances prepaid or refinanced in November alone – this equates to significant potential savings for borrowers. On average, this translates into new loan payments that are approximately $190 less per month than those of borrowers prior to paying off their loans.
‘Additionally, after a decline in September related to the shortened business month, Home Affordable Refinance Program (HARP)-related origination activity is once again near its recorded highs, and we see significant potential for further growth on that front,’ Blecher continues. ‘There are currently approximately 2.6 million loans that fit generalized HARP eligibility requirements, with 50 percent having 'prime quality' credit scores of 720 or above.’
LPS' November data also showed that the impact of Hurricane Sandy continued in ZIP codes hit hardest by the storm. While national delinquencies are moving in line with seasonal trends – that is, tending to rise slightly through the remainder of the calendar year – mortgage delinquencies increased sharply in those areas affected by Sandy. Whereas the national delinquency rate has increased 3.7% since August 2012, delinquencies in Sandy-impacted ZIPs have risen at more than threefold that pace – climbing 15.4% in Connecticut, 15.2% in New Jersey and 14.8% in New York.