Foreclosure Timeline Lengthened by 140 Days Over Past Year: LPS

Mortgages backing homes that were foreclosed on in September had been delinquent for an average of 624 days, according to Lender Processing Services (LPS). That’s up from 484 days in September of last year, just before the processing issues surfaced.

That 624-day foreclosure timeline is the national average. LPS says timelines in judicial states continue to extend at a greater rate. The time from last payment made to foreclosure sale in judicial states is 761 days, which is six months longer than in non-judicial states.
Consequently, the company’s study shows foreclosure sales in judicial foreclosure states remain very low, with only 1.6 percent of their foreclosure inventories moving to sale. The slow pace of liquidation has caused the foreclosure pipeline to balloon, with nearly seven percent of the entire active loan count in judicial states in foreclosure.
Ranked by the percentage of loans that are non-current, seven of the top 10 states are judicial foreclosure states: Florida, New Jersey, Illinois, Ohio, Indiana, Louisiana, and Maryland. Non-judicial states making LPS’ top-10 list include Mississippi, Nevada, and Georgia.
Looking at the national foreclosure population, LPS says almost 40 percent of loans in foreclosure have not made a payment in two years, and 72 percent have not made a payment in a year or more.
Overall, foreclosure starts in September were slightly below the three-year average, LPS reports. Servicers initiated foreclosure on 220,273 homes during the month, down 11 percent from the prior month and 15 percent from a year earlier.
New problem loan rates have increased sharply over the last two months, with 1.6 percent of loans that were current six months ago now 60 or more days delinquent or in foreclosure. LPS says the “sand states” and the Midwest have the highest new problem loan rates.
The company reports that delinquencies are now almost 2x and foreclosures are 8x their pre-crisis levels.
LPS says modification volumes have been falling since June of last year and are continuing to head south. About 2 million mortgage modifications have taken place since January 2010.
On the plus side, modification attributes have changed significantly since the beginning of the housing crisis. From the beginning of 2010, the percentage of mods resulting in payment reductions has held fairly steady at close to 90 percent.
As a result, the performance of modified loans has improved. LPS data show that the percentage of modified loans 60 or more days delinquent after at least 12 months stood at about 24 percent during the second quarter of this year, compared to a redefault rate above 50 percent in early 2009.

Fannie Mae

Several servicers remain below median performance level as of the first half of the year, as ranked by Fannie Mae’s Servicer Total Achievement and Rewards (STAR) Program. Fannie Mae announced the STAR Program in February to measure servicers’ success in providing sustainable solutions to distressed homeowners. The mid-year results released Wednesday by the GSE indicate that four out of the 11 banks in Peer Group 1 areon track to receive at least a three-STAR rating at the end of the year. Banks are ranked on a five-STAR scale, with three STARs signifying median performance level relative to peers and five STARs signifying superior performance. Servicers are split into three peer groups based on the number of Fannie Mae loans they service. Those in Peer Group 1 who are on track to receive at least three STARs are GMAC Mortgage, LLC, Citi Mortgage, Inc., Everhome Mortgage, and Wells Fargo Bank. In Peer Group 2, six of 10 servicers are on track for a median rating at year-end, including, Fifth Third Bank, The Huntington National Bank, HSBC Mortgage Corporation, Aurora Financial Group Inc., Regions Bank and Central Mortgage Company. The results for Peer Group 3 have not yet been released and are expected in the next 30 days. “We are committed to helping stabilize the housing market by requiring servicers to prevent foreclosure whenever possible,” said Leslie Peeler, Vice President for Servicer Portfolio Management, Fannie Mae.

Surge in Defaults Breaks Six-Month Run of Declining

The lingering effects of the foreclosure moratoriums enacted after evidence of improper foreclosure processing came to light appear to be fading. Data released by RealtyTrac Thursday shows the first rise in foreclosure filings since January, with all of the increase coming from new default notices. The tracking company says filings – including default notices, scheduled auctions, and bank-repossessed REOs – rose 7 percent between July and August on the national stage. But with the steep declines seen over previous months, filings remain 33 percent below the level recorded in August 2010. Default notices posted their biggest month-to-month increase since August of 2007, up 33 percent. The 78,880 new default notices filed last month represents a nine-month high, but is down 18 percent from a year earlier. Default notices increased more than 40 percent on a month-over-month basis in several states, including New Jersey (42 percent), Indiana (46 percent), and California (55 percent). James Saccacio, RealtyTrac’s CEO, says the big increase in new foreclosure actions is a sign lenders are pushing foreclosures through and foreshadows more bank repossessions in the coming months. Foreclosure auctions (NTS, NFS) were scheduled for 84,405 U.S. properties in August, a decrease of 1 percent from the previous month and a decrease of 43 percent from August 2010. Despite the nationwide decrease, scheduled auctions were up substantially from the previous month in several states where the auction notice is the first public notice in the process, such as Oregon (19 percent), Arizona (20 percent), Georgia (22 percent), and Colorado (51 percent). Lenders repossessed a total of 64,813 homes (REOs) in August, a 4 percent decrease from the previous month and a 32 percent decrease from a year earlier. The REO total in August marked a six-month low. Five states accounted for more than half of the foreclosure activity in August. Leading the pack was California, where 59,383 properties had foreclosure filings during the month. Florida posted the second highest state total with 23,569 filings, followed by Michigan (13,016), Illinois (12,493), and Georgia (11,743 properties). RealtyTrac’s report shows that defaults surged in August in some of the hardest-hit local markets. A 30 percent month-over-month increase in default notices helped Las Vegas maintain the nation’s highest foreclosure rate among large metropolitan areas. Eight of the metros with top-10 foreclosure rates can be found in California. All but Stockton posted a double-digit monthly increase in default notices. The biggest jump was found in Visalia-Porterville, where new defaults climbed 97 percent from the previous month. Closing out the metro top-10 list is Reno, Nevada. There, new defaults rose 23 percent in August.

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