lps mortgage monitor - november 2012

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LPS Mortgage Monitor

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December 2012 Mortgage Performance Observations

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Data as of November, 2012 Month-end

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November 2012 Focus Points

• Focus 1: Foreclosure inventory dropping sharply;

November 2012 Focus Points

y pp g p y;starts remain down due to National Mortgage Settlement (“NMS”)

• Focus 2: Origination activity is strong as rates remain near historic lows; HARP activity remains ynear historic highs

• Focus 3: Large segments of the market can stillFocus 3: Large segments of the market can still benefit from both HARP and traditional refinancing opportunities


Focus 1 Summary:

• Foreclosure starts remain low due to NMS;

Monthly Mortgage PerformanceForeclosure starts remain low due to NMS; associated drop in foreclosure inventory

• Delinquencies following typical seasonal trends; lower foreclosures may be masking short term improvement

• Delinquencies are up over 15% in HurricaneDelinquencies are up over 15% in Hurricane Sandy impacted regions


Drop in FC starts due to NMS; expect a rebound in coming months

Settlement requires 14 day notice to borrowers prior to referral; letters were

sent starting in September


FC sales maintained stable national trend while starts dropped sharply


DQs in-line with seasonal trends; FCs down 10% since Sep due to low starts

Drop in foreclosures due to NMS but no discernible

increase in delinquenciesincrease in delinquencies beyond seasonality


Delinquencies have increased sharply in Hurricane Sandy impacted zips

Nat’l Delinquency Rate: 7.12%q y+3.7% since Aug-12


Focus 2 Summary:

• Originations increased in October; expected

Originations and CharacteristicsOriginations increased in October; expected to decline slightly but remain elevated in NovemberNovember

• Newly originated mortgages have payments that are 15% lower than loans paying off

• HARP related activity remains near historicHARP related activity remains near historic highs


October originations increased from September’s shortened month drop


Loan prepayments remain high; 2% of total balance prepaid or refi’d in Nov


Rates on new loans are about 1.5 percentage points below pay-offs

Approximately$190 payment

difference


High LTV (likely HARP) originations are still high, but a lower % of total


Focus 3 Summary:

• Almost 10 million outstanding mortgages

Refinance EligibilityAlmost 10 million outstanding mortgages may be eligible for traditional refinancing with an additional 2 6 million possible viawith an additional 2.6 million possible via HARP

• Potential payment reduction opportunity d 30% t t k t texceeds 30% at current market rates


Almost 20% of mortgages have “refinancible” characteristics

Modified loans


50% of the 2.6M loans with HARP eligible attributes have >720 credit

670k loans have >720 credit and over 6 0%credit and over 6.0%

interest rate


*HARP Attributes: GSE, Close prior to May-09, Curr LTV >80%, No more than 1 DQ in 12 mos and 0 in 6 mos

Borrowers could see significant payment reductions if able to refi


New payments calculated based on refinance into 3.75% rate, same term, UPB increases by 1%

*HARP Attributes: GSE, Close prior to May-09, Curr LTV >80%, No more than 1 DQ in 12 mos and 0 in 6 mos**Traditional Refinance Attributes: Interest rate > 4.5%, LTV <= 80%, Credit Score >= 720

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December 2012 Appendix

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Data as of November, 2012 Month-end

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November 2012 Data DashboardNovember 2012 Data Dashboard


Seven of the top 10 states for total non-current are judicial

Average year over year change in non-current percent


(includes loans 30+ Delinquent or in Foreclosure)Judicial = -6.9% Non-judicial = -11.9%

Drop in foreclosure starts supported a drop in overall inventory


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Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions

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Disclosure Page: Product DefinitionsDisclosure Page: Product Definitions

*Conforming limits do not account for temporary or high-cost area increases.


Disclosure Page: Metrics DefinitionsDisclosure Page: Metrics Definitions

• Total Active Count: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total q yactive count.

• Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquentforeclosure are reported separately and are not included in the MBA days delinquent.

• 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month.

• Foreclosure Inventory: The servicer has referred the loan to an attorney for f l L i i f l i t f f l t lforeclosure. Loans remain in foreclosure inventory from referral to sale.

• Foreclosure Starts – Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month.

• Non-Current: Loans in any stage of delinquency or foreclosure.y g q y• Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that

moves into post-sale status or is flagged as a foreclosure liquidation.• REO: The loan is in post-sale foreclosure status. Listing status is not a consideration,

this includes all properties on and off the market


this includes all properties on and off the market.• Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency

status vs. those improving.

With the June 2012 month-end data LPS has updated itsWith the June 2012 month end data, LPS has updated its extrapolation methodology to incorporate, among other things, improved estimates of market size, which includes hi h f t d b i d t dhigher coverage of government and subprime products and increases LPS’ estimate of the total first lien residential mortgage market by three percent to 50.4 million.

To ensure consistency in trend analysis, the new methodology has been applied to all historical data andmethodology has been applied to all historical data and previously reported mortgage performance statistics have been adjusted accordingly.

The following section contains information on market coverage and comparisons with previously reported


statistics. Additional information is available upon request.

The new scaling increases overall estimated industry loan count by approximately 1.2 million loans

Prior industry estimates declinedPrior industry estimates declined because scaling didn’t support current servicing transfer volumes


New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers


Delinquencies decline based on higher estimated coverage of FHA and subprime loans.

Converge due to new servicers and transfer issues with prior scaling


Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired


Foreclosure starts remain consistent, withrates shifting up slightly


Performance Statistics Changes: Database CountsPerformance Statistics Changes: Database Counts


Performance Statistics Changes: State Level DetailPerformance Statistics Changes: State Level Detail


lps mortgage monitor - november 2012

Documents

lender processing services22

lender processing services16

lender processing services19

powelender processing

active loans

credit670k loans

new loans

loans inforeclosure