Mortgage delinquencies drop to 4-year low

The percentage of borrowers who have dropped behind on their mortgage payments fell to a four-year low in the first three months of 2012, a bankers’ group said Wednesday.

Credit Bureau says Mortgage Delinquencies at Three-Year Low

TransUnion said on Tuesday that its National Mortgage Loan Delinquency Rate hit the lowest level in the first quarter of 2012 that it has seen since the first quarter of 2009. The rate of mortgage delinquencies of 60 days or more fell from 6.01 percent in the fourth quarter of 2011 to 5.78 percent, a 3.83 percent decrease.  The rate had risen for the last two quarters after six straight quarters of decline. The rate is now 6.62 percent below where it was in the first quarter of 2011.

All but eight states experienced quarter-over-quarter decreases in their mortgage delinquency rates and 73 percent of metropolitan areas did as well.  During the prior two quarters only 36 percent of the MSAs saw any improvement in their delinquency rates.

Even though unemployment remains elevated and house prices face continued downward pressure TransUnion predicts mortgage delinquency rates will drift downward through the year as more homeowners are able to repay their mortgage debt obligations.  

“To see that quarter over quarter, and year over year, more homeowners were able to make their mortgage payments is certainly welcome news,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit. “Before this, we saw two quarters of delinquency increases and while we are still about three-times above the pre-recession norm, this should mark the start of consistent improvement each quarter.”

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April Housing Scorecard Shows Progress, but ‘Fragility’ Lingers

The Administration’s Housing Scorecard for April claims progress on both home sales and mortgage delinquencies “but continued fragility overall.”  Delinquencies have now declined for four straight months and sales of existing homes in the first quarter of the year were 5.3 percent higher than in the same period in 2011.

The Scorecard is essentially a summary of data on housing and housing finance released by public and private sources over the previous month and/or quarter.  Most of the data such as new and existing home sales, permits and starts, mortgage originations, and various house price evaluations have been previously covered by MND. 

The Housing Scorecard incorporates by reference the monthly report of the Home Affordable Modification Program (HAMP) and related remediation programs.  Through March HAMP has facilitated 990,000 permanent first lien modifications since it began in April 2009.  These modifications have saved homeowners an estimated $12.2 billion in monthly mortgage modifications – an average of $535 per month. 

During March there were 20,940 trial modifications started and 19,940 trials converted to permanent status. Since the program began there have been over 2 million trial modification offers extended to borrowers and 1,830,000 homeowners who entered into trials.  There are 68,630 active trials and the average trial length is now 3.5 months compared to trials nearly three times that length earlier in the program.

Eight of the 12 largest servicers participating in the HAMP program have now reached the goal of an 85 percent trial to permanent modification conversion rate.  The four which have not are still above an 80 percent rate.

Servicers also continue to improve in the manner in which they contact delinquent borrowers and complete initial HAMP evaluations.  All servicers are now above an 85 percent success rate in making contact with the right party according to program guidelines and most have at least a 75 percent success rate in completing the evaluations

There are a variety of other foreclosure prevention programs run under the HAMP mantle.  Here is the most recent data on several of them.

The Principal Reduction Alternative (PRA) program run under HAMP has been at the center of considerable controversy in recent weeks as the Federal Housing Finance Agency, one of two sponsors of HAMP, refuses to allow Freddie Mac and Fannie Mae (the GSEs) to participate in principal reductions despite considerable pressure from Congress and the other HAMP sponsor, the Treasury Department.  Even without the availability of GSE loans to the program there have now been 77,640 PRA trial modifications started, 52,243 of which have been converted to permanent modifications.  The median principal reduction is $69,083, a median of 31.4 percent of the outstanding principal balance before modification.

The Second Lien Modification Program (2MP) has started modifications on 76,218 junior liens.  There have been 16,599 second liens fully extinguished and 57,097 modified.  The median lien amount of extinguished loans is $61,355 and the median modification is $7,027.

Another program run under the auspices of HAMP is the Home Affordable Foreclosure Alternatives or HAFA which facilitates short sales and deeds-in-lieu of foreclosure as alternatives to foreclosure.  To date there have been 40,252 HAFA transactions completed, almost all short sales.  HAFA completions were largely accomplished with privately held loans (26,660); portfolio loans accounted for 10,994 HAFA transactions and GSEs loans for 2,600.

Modified loans are still performing better than is usually the case.  Even among the oldest of the modifications the serious delinquency rate is 33.5 percent after two full years.  The performance of the modifications has improved over time as can be seen in the table below.

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OBAMA ADMINISTRATION RELEASES APRIL HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the April edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the April Housing Scorecard show some promising signs of stability, though the overall outlook remains mixed. Mortgage delinquencies have declined for four consecutive months and remain substantially below year ago levels, while sales of existing homes in the first quarter were 5.3 percent higher than one year ago. Data on home prices were soft in many mortgage markets, though adjusting for the traditionally slow winter months reveals the first uptick in prices since April 2011. The full report is available online at www.hud.gov/scorecard.

Foreclosure Stats Tick up Slightly in LPS March Report

The March Mortgage Monitor Report from Lender Processing Services (LPS) showed a slight uptick in several measures of foreclosure activity, but overall the distressed loan situation appears to be improving.  In March foreclosure starts rose 8.1 percent from February to 186,446 compared to 172,502.  This is a 31.1 percent decrease from the 270,681 starts in March 2011.  Despite the slight increase in March, there were fewer starts during the month than in nine of the previous twelve months.

At the same time, first time foreclosure starts were up in March to the highest level in five months.  Less than 40 percent of the starts during the month were for loans that had previously been in foreclosure.

The national foreclosure inventory stayed relatively stable in March.  At 4.14 percent it is near the historically high levels maintained since the end of 2010.  The judicial foreclosure states, however, have foreclosure inventories of 6.5 percent while the inventories in non-judicial states are 2.5 times lower at 2.45 percent.

The foreclosure inventory continues to age.  An estimated 40 percent of loans in the inventory have been there in excess of two years.  In judicial states that number is closer to 50 percent.

Mortgage delinquencies have continued to decline and are now at the lowest levels since August 2008.  The national rate is 7.09 percent, down 6.3 percent since February and 8.8 percent below the levels one year earlier.  The decline in delinquencies is consistent across both judicial and non-judicial states as is the decline in seriously delinquent (more than 90 days) loans

Foreclosure sales totaled 67,890 for the month, a decrease of 8.5 percent from February.  This is the lowest level for foreclosure sales since December 2010 and almost half the number of sales that occurred in the peak month of September 2010.  

The states with the highest percentage of non-current loans continue to be Florida, Mississippi, New Jersey, Nevada, and Illinois.

February mortgage originations rebounded somewhat from January lows, totaling 521,229 by mid-month.  This was an increase of 10.4 percent for the month and 16.4 percent for the year.  Prepayments, a key indicator of mortgage refinancing, increased across all investor categories.

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