lps mortgage monitor - august 2013
DESCRIPTION
LPS manages the nation's leading repository of loan-level residential mortgage data and performance information on nearly 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report.TRANSCRIPT
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LPS Mortgage Monitor
September 2013 Mortgage Performance Observations
Data as of August, 2013 Month-end
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• Focus 1: Prepayment activity and refinance
opportunities
• Focus 2: Home price improvement and HE
potential
• Focus 3: Foreclosure sales and pipeline
update
September 2013 Focus Points
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• Prepayment rates declined sharply in
August as mortgage rates continued to rise
• Over 50% of borrowers are now “out of the
money” for refinancing
• 5.7M loans have “refinancible”
characteristics, down from ~10M in Dec-12
• HARP activity has declined, but still about
30% of GSE originations
Focus Point 1: Prepayment activity
and refinance opportunities
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Prepayments down over 30%
since May with ~100bp rate rise
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Originations were strong through
July but prepayments signal decline
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Over 50% of borrowers are now
“out of the money” for refinancing
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5.7M loans have “refinancible”
characteristics vs. 10M in Dec-12
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~30% of today’s GSE
originations are HARP
Bubble Crisis HARP
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• National home prices continue to improve,
though most regions have had small gains
relative to losses
• Recent vintages have very few second liens
as compared to earlier years
• Higher mortgage rates and home prices
may lead to new opportunity for HEs
Focus Point 2: Home price
improvement and HE potential
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Home prices are at their
highest levels since 2009
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Most regions have had small home
price gains relative to their losses
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
-80% -60% -40% -20% 0% 20%
Peak-to-Trough HPI Change (7/2006 - 1/2012)
Peak-t
o-T
od
ay H
PI
Ch
an
ge
(7/2
006 -
5/2
013)
Austin
New York Phoenix
San Jose
Las Vegas
Hardest hit areas
are up marginally
from the bottom
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Recent vintages have very few
seconds compared to earlier years
0%
10%
20%
30%
40%
50%
60%
2003 2005 2007 2009 2011 2013
Fir
st
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ort
gag
es W
hic
h
Have a
Seco
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Lie
n
2003 vintage used
seconds to take
cash out
Bubble vintages took
out second liens at
origination.
2010
2003
2006
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Higher rates and home prices may
lead to new opportunity for HEs
0%
10%
20%
30%
40%
50%
60%
70%
2000 2002 2004 2006 2008 2010 2012
Vintage
Fir
st
Lie
n M
ort
gag
es W
hic
h
Have a
Seco
nd
Lie
n
Today
At Origination
By 2017, if recent
vintages follow
the pattern of the
2003 vintage.
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• Foreclosure sales have been increasing, but
monthly average for ’13 is lower than ‘12
• Foreclosure starts continue to decline
• National foreclosure pipelines are shrinking,
but pressure is still growing or extreme in
several states
Focus Point 3: Foreclosure
sales and pipeline update
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FC sales up, but avg 61k/mo in ‘13 vs.
73k in ‘12; starts continue to decline
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National foreclosure pipelines
continue to shrink
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Pipeline pressure is still growing or
extreme in many states
+68% since
Q4 2012
+136% since
Q2 2012
+56% since
Q4 2011
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LPS Mortgage Monitor
September 2013 Appendix
Data as of August, 2013 Month-end
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August 2013 Data Summary
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Seven of the top 10 states for total
non-current are judicial
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Loan counts and
average days delinquent
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LPS Mortgage Monitor
Disclosures: Product / Metric Definitions and
July 2012 Market Sizing Revisions
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Disclosure Page: Product Definitions
*Conforming limits do not account for temporary or high-cost area
increases.
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Disclosure 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
active 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 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
foreclosure. 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.
• 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.
• Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency
status vs. those improving.
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With the June 2012 month-end data, LPS has updated its
extrapolation methodology to incorporate, among other
things, improved estimates of market size, which includes
higher 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 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.
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The new scaling increases overall estimated industry
loan count by approximately 1.2 million loans
Prior industry estimates declined
because scaling didn’t support
current servicing transfer volumes
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New scaling reflects the higher coverage of government
loans and allows for the incorporation of new servicers
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Delinquencies decline based on higher
estimated coverage of FHA and subprime loans.
Converge due to new
servicers and transfer
issues with prior scaling
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Foreclosure inventory remains almost identical, but
shifts up in recent months as transfer bias is repaired
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Foreclosure starts remain consistent, with
rates shifting up slightly
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Performance Statistics Changes: Database Counts
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Performance Statistics Changes: State Level Detail