LPS: Mortgage Delinquencies Down 15% Since December

Mortgage delinquencies continued to decline in May, reaching 6.08% for the month, the lowest rate since 2002, according to Lender Processing Services' (LPS) Mortgage Monitor report.

The total U.S. foreclosure presale inventory rate was 3.05%.

Delinquencies were down 2.11% compared to April and more than 15% since the end of December 2012, the report finds. Driving the decrease is the fact that home prices are rising, bringing many borrowers out of negative equity. In addition, unemployment is improving, and consumer confidence is reaching new highs.

The report shows that origination activity was strong in April, with about 835,000 new loans issued, about a 1.8% increase over March and a 34.1% increase over April 2012.

The data also shows an increase in prepayment rates, indicating that refinance activity remained strong in May, despite the increase in interest rates.

‘Though they are still approximately 1.4 times what they were, on average, during the 1995 to 2005 period, delinquencies have come down significantly from their January 2010 peak,’ said Herb Blecher, senior vice president of applied analytics for LPS. ‘In large part, this is due to the continuing decline in new problem loans – as fewer problem loans are coming into the system, the existing inventories are working their way through the pipeline.

‘New problem loan rates are now at just 0.73 percent, which is right about on par with the annual averages during 2005 and 2006, and extremely close to the 0.55 percent average for the 2000-2004 period preceding,’ Blecher added.

Looking at the number of underwater loans in the U.S., the report finds that the total share of mortgages with loan-to-value ratios of greater than 100% ‘had declined to just 7.3 million loans as of the end of the first quarter of 2013. This accounts for less than 15 percent of all currently active loans and represents a nearly 50 percent year-over-year decline,’ Blecher said.

The month-over-month change in the foreclosure presale inventory rate was -3.91%, according to the report. States with highest percentage of non-current loans included Florida, New Jersey, Minnesota, Nevada and New York. States with the lowest percentage of non-current loans included Montana, Arkansas, Wyoming, South Dakota and North Dakota.

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