LPS: Prepayment Rates Reach Seven-Year High

The August Mortgage Monitor report released by Jacksonville, Fla.-based Lender Processing Services (LPS) shows a spike increase in prepayment rates during August that reached the highest levels since 2005.

‘Our analysis showed an increase in prepayment activity across the entire combined loan-to-value (CLTV) continuum,’ says LPS' Applied Analytics Senior Vice President Herb Blecher. ‘While those loans with equity, particularly 80 percent CLTV and below, have much higher prepayment speeds, the impact of the Home Affordable Refinance Program (HARP) was also clear. Loans with a CLTV of more than 120 percent saw the greatest uptick – a 65 percent increase for the year to date. However, it is also becoming evident that loans originated in 2007 and earlier have diminished prospects for conventional refinancing opportunities.’

LPS adds that foreclosure inventory in August remained more than eight times the 1995-2005 pre-crisis period, despite national foreclosure inventory dropping to the lowest point since October 2010. In judicial states, foreclosure inventory was at a near-record high of 6.49%, compared to 2.28% in non-judicial states. Overall, foreclosure sales were up 12% nationally in August, but remained 33% below their September 2010 peak.

The states with the highest percentage of noncurrent loans in August were Florida, Mississippi, New Jersey, Nevada and New York. The states with the lowest percentage of non-current loans were Montana, Alaska, South Dakota, Wyoming and North Dakota.


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