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18 Percent of Current Mortgages Underwater

 

 

JACKSONVILLE, Fla. – Sept. 10, 2012 – The July Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) shows that national foreclosure inventories remain stable – and near historic highs – while delinquencies, down 30 percent from the January 2010 peak, continued to decline slightly for the month. The report also highlights the link between negative equity and new problem loans.
 “The July mortgage performance data shows a continuing correlation between negative equity and new problem loans,” explained Herb Blecher, senior vice president, LPS Applied Analytics. “Nationally, 18 percent of borrowers who are current on their loan payments are ‘underwater’ (owing more on the mortgage than the home’s current market value), ranging from a low of 0.4 percent in Wyoming to nearly 55 percent in Nevada. As negative equity increases, we see corresponding increases in the number of new problem loans. In Nevada and Florida, two of the states with the highest percentage of underwater borrowers, more than three percent of borrowers who were up to date on their payments are 60 or more days delinquent six months later. This suggests that further home price declines – should they occur – could jeopardize recent improvements.”
The July data also shows that non-judicial foreclosure states continue to see greater improvement in non-current rates (including loans 30 or more days delinquent or in foreclosure) than those in their judicial counterparts. On a year-over-year basis, judicial states have seen non-current inventories decline 3.1 percent as compared to an 8.7 percent drop in non-judicial states. Looking at the change from the peak, the non-current inventory in non-judicial states was down 31 percent compared to a decline of 13 percent in judicial states. A few states on both sides of the foreclosure process – Washington (non-judicial), New Jersey and Vermont (both judicial) still remained at historic highs as of the end of July.
As reported in LPS’ First Look release, other key results from LPS’ latest Mortgage Monitor report include:
Total U.S. loan delinquency rate: 7.03 %
Month-over-month change in delinquency rate: -1.6 %
Total U.S. foreclosure pre-sale inventory rate: 4.08 %
Month-over-month change in foreclosure pre-sale inventory rate: -0.2 %
States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL
States with the lowest percentage of non-current* loans: MT, AK, WY, SD, ND
 
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Note: Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets.

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