LPS: Housing Market Shows Signs Of Improvement

Processing Services Inc.'s (LPS) recently published Mortgage Monitor, which reports on industry data collected as of June 30, suggests the nation's housing market may be turning a corner toward recovery. According to the report, new delinquencies dropped to their second-lowest level in the last year, and the percentage of loans rolling to a more delinquent status declined across all product types. Moreover, the gap between loans improving and loans deteriorating narrowed slightly. LPS cited several factors that appear to be contributing to improvements in the housing market. First, at current interest rates, there is a lowered risk of increased defaults associated with outstanding hybrid adjustable-rate mortgage (ARM) resets. Second, liquidity is becoming increasingly available again to borrowers who are in some stage of delinquency. A dramatic improvement in borrower credit quality has created a significant decline in first-payment defaults. Finally, the impact of homeowner aid programs, most notably the federal government's Making Home Affordable program, may be contributing to the resolution of many delinquent loans in the pipeline, LPS says. Positive trends were tempered, however, by a continuation of disappointing results from much of the nation. Foreclosure inventories continued to climb to record highs, while non-current loans (i.e., defaults and foreclosures) rose to 11.44%. Foreclosure starts in June increased 1.6% to the second-highest level on record, while reinstatement and recidivism rates are not yet showing signs of improvement. Jumbo prime loans continue to experience the highest rates of deterioration, with jumbo prime foreclosure rates up 580% since January 2008. States with the most non-current loans (which is calculated by combining foreclosures and delinquencies as a percent of active loans in a state) were Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Michigan, Ohio and West Virginia. States with the fewest non-current loans included North Dakota, South Dakota, Wyoming, Montana, Alaska, Vermont, Nebraska, Oregon, Colorado and Washington. SOUR


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