Recent market data analyzed by Lender Processing Services (LPS) highlights evidence of delays in the resolution of unpaid mortgages in the wake of widespread reports of robo-signing and reveals congestion in areas where delinquent loans are languishing.
The clogged foreclosure pipelines servicers have been struggling to get a handle on since the housing crisis set in are ballooning further and adding to that looming shadow inventory of properties that will ultimately become REO, and some analysts warn will slow home price appreciation.
According to the latest mortgage performance report from the Florida-based technology and analytics firm, the volume of loans moving to REO continued to drop in November as foreclosure suspensions by major lenders interrupted and pushed back foreclosure sales. While the 90-plus day delinquency category had been steadily declining, LPS says in November the number of loans moving to seriously delinquent status beyond 90 days far outpaced the number of foreclosure starts moving out of the 90-plus day bucket.
The company reports that as of the end of November, nearly 2.2 million loans were 90 days or more past due
but not yet referred to a foreclosure attorney. Of these, one-third have not made a mortgage payment in at least a year.
In the month of November, 261,153 loans were referred to foreclosure, which represents a 0.7 percent decline from the previous month. But even though fewer loans moved to the foreclosure start line, LPS says the nation's foreclosure inventory (defined as loans that have been passed on to an attorney but not yet at the final stage of foreclosure sale) continued to rise for the fifth straight month as sales of foreclosure properties dropped again.
According to LPS' study, the total U.S. foreclosure inventory rate rose to 4.08 percent as of the end of November, with 2,157,000 loans caught in the pipeline somewhere in the foreclosure process. That's up from 3.92 percent, or 2,090,000 loans, the month before.
LPS says the foreclosure inventory of jumbo prime loans is nearly seven times higher than it was in January 2008; the inventory of agency (Fannie Mae and Freddie Mac) prime loans is nearly six times higher; and the foreclosure inventory of option adjustable-rate mortgages (ARMs) is approaching five times the inventory in January 2008.
One bright spot in LPS' report is that the number of new problem loans declined nearly 5.4 percent from October to November, which is opposite of the seasonality trend that typically impacts new delinquencies at the end of the year. The company also noted that self-cures for loans one to two months delinquent increased in November to a six-month high.
Still, LPS says the total number of delinquent loans is nearly 2.1 times historical averages, at 9.02 percent of outstanding home mortgage loans, while the nation's foreclosure inventory is currently at 7.7 times historical averages.