: : :

: : :

: :: :

: : :

: : :

: : :

: : :

: : :

: : :

: : :

:

LPS Mortgage Monitor

ON

S.O

NS.

: : :

: : :

: :

January 2013 Mortgage Performance Observations

WER

FUL

SOLU

TIO

WER

FUL

SOLU

TIO

Data as of December, 2012 Month-end

E S

OU

RC

E. P

OW

E S

OU

RC

E. P

OW

Lender Processing Services 1

ON

EO

NE

January 2013 Focus Points

• Focus 1: CFPB’s “Qualified Mortgage”, Refi and

January 2013 Focus Points

g g ,HARP Update

• Focus 2: National Mortgage Settlement (NMS) and CFPB Servicing Guidelines - Foreclosure Impact

• Focus 3: Negative equity improvement

• Focus 4: 2012 in Review

Lender Processing Services 2

Focus Point 1: CFPB’s Qualified Mortgage (“QM”) and Refi Update

• QM would have restricted at least 23% of 2005 originations; limited impact today

• “Refinancible” loan population continues toRefinancible loan population continues to grow, even as new originations rise

• HARP originations still strong

Lender Processing Services 3

At least 2% of 2012 originations would be non-QM vs. 23% in 2005*

16% of GSE loans originated in 2012 would

not otherwise be QMnot otherwise be QM

Lender Processing Services 4*Estimate based on product type (IO, Option ARM), documentation and term; does not account for points, fees or DTI criteria

Almost 20% of mortgages have “refinancible” characteristics

In Dec 2011, 7.2M loans ec 0 , oa smet “refinancible”

criteria, with approx5.5M refis since

Lender Processing Services 5

High LTV (likely HARP) originations are still strong

An additional 2.6M loans may

*be eligible*

% of all High LTV origCA: 13% FL: 8.3%IL: 5 8% MI: 5 5%IL: 5.8% MI: 5.5%

GA: 5.2% AZ: 4.7%

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

Focus 2 Summary: Foreclosure

• Foreclosure starts increasing but still

Activity - NMS and CFPB RulesForeclosure starts increasing, but still impacted by NMS

• CFPB Servicing Guidelines• CFPB Servicing Guidelines– No FC starts prior to 120 day delinquency

R t i t d d l t ki– Restricted dual-tracking– No FC sale until “all other alternatives”

id dconsidered• Foreclosure sale drop; in-line with historic

Q4 l d liLender Processing Services 7

Q4 seasonal decline

Foreclosure starts are slowly increasing after referral letters

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

sent starting in September

Lender Processing Services 8

Almost 30% of starts in 2012 were prior to 120 day delinquency

In 2012, an average of 49k loans per month hadloans per month had

foreclosure initiated prior to the new CFPB guidelines

Lender Processing Services 9

FC sales are at the lowest level since March of 2009

Lender Processing Services 10

Focus 3 Summary:

• Improving equity situation continues to

Negative EquityImproving equity situation continues to create new refinance opportunities

• Negative equity down 35% since the start of 20122012

• “Sand states” still have high rates of underwater loans

Lender Processing Services 11

Almost 4M loans with non-conforming LTVs last year may qualify today

3 4 million loans are on the3.4 million loans are on the cusp of the conforming LTV

threshold

Lender Processing Services 12

Negative equity is down 35% since January 2012

Lender Processing Services 13

“Sand states” have high rates of underwater and new problem loans

NV: 49%

FL: 39%

AZ: 26%CA: 24%CA: 24%

Lender Processing Services 14

Focus 4 Summary:

• Delinquencies continued to improve down

2012 ReviewDelinquencies continued to improve, down 32% from January 2010 peak

• Following regional improvement, f l b t d li ti llforeclosures began to decline nationally

• Originations up 34% year over year; primarily government backed

Lender Processing Services 15

p y g

DQ improvement has continued; FCs just starting to drop

DQ%

DQ YoYChange

FC%

YoYChange

1995-2005 4.32% -0.5% 0.53% 0.4%

Dec-2009 10.32% +21.0% 3.74% +64.3%

Dec-2010 8.47% -17.9% 4.22% +13.0%

Dec-2011 7.89% -6.9% 4.20% -0.6%

Dec-2012 7.17% -9.1% 3.44% -18.0%

Lender Processing Services 16

Strongest full year originations since 2007; 84% gov’t today vs. 69% in ‘07

2005 2006 2007 2008 2009 2010 2011 2012

Count 13.1M 11.2M 9.1M 6.7M 8.3M 7.2M 6.4M 8.6M

% Gov 52% 52% 69% 87% 91% 89% 87% 84%

Lender Processing Services 17

: : :

: : :

: :: :

: : :

: : :

: : :

: : :

: : :

: : :

: : :

:

LPS Mortgage Monitor

ON

S.O

NS.

: : :

: : :

: :

January 2013 Appendix

WER

FUL

SOLU

TIO

WER

FUL

SOLU

TIO

Data as of December, 2012 Month-end

E S

OU

RC

E. P

OW

E S

OU

RC

E. P

OW

Lender Processing Services 18

ON

EO

NE

December 2012 Data DashboardDecember 2012 Data Dashboard

Lender Processing Services 19

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

Average year over year change in non-current percent

Lender Processing Services 20

(includes loans 30+ Delinquent or in Foreclosure)Judicial = -7.0% Non-judicial = -11.8%

Delinquencies remain elevated for Sandy Affected Areas in NJ and CT

Lender Processing Services 21

New Problem loans are on decline in non-judicial, stable in judicial states

Lender Processing Services 22

Foreclosure to 90+ counts are lowest in over a year

Lender Processing Services 23

: : :

: : :

: :: :

: : :

: : :

: : :

: : :

: : :

: : :

: : :

:

LPS Mortgage Monitor

ON

S.: :

: : :

: : :

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

WER

FUL

SOLU

TIO July 2012 Market Sizing Revisions

E S

OU

RC

E. P

OW

Lender Processing Services 24

ON

E

Disclosure Page: Product DefinitionsDisclosure Page: Product Definitions

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

Lender Processing Services 25

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

Lender Processing Services 26

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

Lender Processing Services 27

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

Lender Processing Services 28

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

Lender Processing Services 29

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

Converge due to new servicers and transfer issues with prior scaling

Lender Processing Services 30

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

Lender Processing Services 31

Foreclosure starts remain consistent, withrates shifting up slightly

Lender Processing Services 32

Performance Statistics Changes: Database CountsPerformance Statistics Changes: Database Counts

Lender Processing Services 33

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

Lender Processing Services 34