sales have not regained the momentum they had before numerous lender moratoria
brought the process to a virtual halt last Fall.
According to the May Mortgage Monitor Report released by Lender Processing Services, Inc. (LPS), the number of
serious delinquencies (90 days delinquent) and foreclosures (loans referred to
an attorney for foreclosures but not yet sold) outnumber the actual
foreclosure sales by a factor of 50 to 1.
During the month of May there were a total of 4,084,557 loans that were
seriously delinquent or in foreclosure while only 78,676 foreclosure sales took
place in the month.
delinquency rate was essentially unchanged from April at 7.97 percent but was
down from a rate of 9.74 in May 2010.
The foreclosure rate declined slightly to 4.11 percent from 4.14 but was
up substantially from the 3.66 percent rate a year earlier. There
were 197,007 foreclosure starts in May, nearly 10 thousand more than in April
but down from 237,198 one year earlier.
problem loans, defined as those that were 60 days or more delinquent during the
month but had been current six months earlier, were at 1.27 percent, down from
approximately 1.80 percent a year earlier and less than one-half the peak level
seen in 2009.
sales peaked almost exactly three years ago at around 130,000 per month and,
after a number of sharp monthly variations, were at almost that level last
September when deficiencies in the foreclosure process were uncovered and foreclosure
sales plummeted to about 60,000 in October.
Sales have not recovered. The
78,000+ sales in May represented less than 6 percent of the loans in the
May data shows that the biggest drop in foreclosure sales since the September
2010 peak has been seen in East Coast states, with a decline of 96% in DC, 80%
in Maryland, 79% in New York, and 75% in New Jersey. Additionally, inventories
of foreclosures in judicial states have increased twice as much as inventories
in non-judicial states over the last year.
average time a loan spends in foreclosure continues to increase. In May 40 percent of delinquent borrowers had
not made a payment in over a year and one third of those in foreclosure had not
made a one in over two years.
equity continues to be a problem. LPS
reports that nearly 30 percent of performing loans are in a negative
equity position. This is ominous as other LPS data shows that
underwater loans default with 10 times the frequency of those where the
borrowers have equity. Of the 70 percent of current foreclosures with
equity, over 35 percent have combined loan to value ratios of over 150
“Nationally, housing faces a long road to recovery, but not all markets
are equal”, says MND’s Managing Editor Adam Quinones. “While areas with a high concentration of distressed
properties are clearly stuck in a deflating environment, some
communities will see price stability. It’s all based on local and
regional economies. Where are jobs being created? Where are the best
schools? Where is value being created by the community? Where do buyers
want to live? This is where the housing recovery can build momentum. Of
course you need to be in the right financial situation to even be asking
these questions. That’s another problem all together. Tight credit
demands from lenders combined with damaged borrower credit profiles (and
a lack of reserves) implies buyer demand will lag the broader economic
recovery, which is lagging itself. Finding a bottom in the hardest hit
areas is another story. Here, the GSEs, FHA, and major banks must manage
inventory carefully. In these areas, home prices remain highly-sensitive
to even the smallest of shocks in buyer sentiment, such as the
premature release of shadow inventory. It’s gonna be a tight-rope walk.
Step 1 is stopping the negative feedback loop.”
Housing Scorecard: Delinquencies Down. Foreclosures Delayed
Foreclosure Filings Drop. Prevention Policies Distorting Supply and Demand
LPS Data Shows Long Delays in Foreclosure Process
CoreLogic Estimates Shadow Inventory at 1.8 Million Homes
Foreclosure Filings Fall. Robogate Fallout Skews Report
data is based on mortgage data and performance information on nearly 40 million
first mortgages across all types of credit products.