Loss Mitigation

Mortgage delinquencies fell back on both a monthly and annual basis in March, according to preliminary market data released by Lender Processing Services (LPS) for the month. The company's estimation puts the national delinquency rate - measured as 30 or more days past due but not in foreclosure - at 7.09 percent. At the same time, the foreclosure rate inched up ever so slightly to 4.14 percent. Altogether, the numbers equate to just over five-and-a-half million properties in foreclosure or past due on their debt.

California may have some rough patches in it, but overall, with the worst part of the housing crises appearing to be over, the state is seeing fewer delinquencies and losing a smaller number of homes to foreclosure, according to a San Diego-based real estate data provider. A total of 56,258 Notices of Default (NODs) were recorded at county recorders offices in California during the first quarter of 2012, the lowest level since the second quarter of 2007 when 53,943 NODs were recorded, according to DataQuick. NOD filings peaked in the first quarter of 2009 at 135,431.

Parties to the landmark mortgage servicing settlement appointed one man to oversee $25 billion in compliance. In an interview with DS News, Joseph A. Smith, onetime banking commissioner for North Carolina and ex-nominee to head the Federal Housing Finance Agency, lays out the role he envisions playing as he monitors funds for homeowners, states, and the federal government. The settlement monitor speaks with an understated tone about his stewardship of the historic settlement, which 49 state attorneys general and federal officials completed in February.

In a speech to the National Council of State Housing Agencies on Monday, a Treasury official named a number of measures to address challenges in the housing market, and stressed one solution that has not been applied by Fannie Mae and Freddie Mac: principal reduction. Mary Miller, under secretary for domestic finance, says given the large percentage of outstanding mortgages that are currently backed by Fannie or Freddie, it is important that the GSEs participate in the principal reduction alternative of the Home Affordable Modification Program.

The Case-Shiller Home Price Indexes fell for the sixth straight month in February with the 10- and 20-city indices each dropping 0.8 percent from January, Standard & Poor's, which compiles the indexes, reported Tuesday morning. The 10-city index slid to its lowest level since May 2003 and the 20-city index dropped to its lowest level since October 2002. Prices fell in 16 of the 20 cities surveyed, improving month-month in only Miami, Phoenix and San Diego. Prices were unchanged month-month in Dallas. Prices were down year-year in 15 of the 20 cities, improving only in Denver, Detroit, Miami, Minneapolis and Phoenix.

Porthos Portfolio Management, LLC, a privately held capital and asset management company, recently announced Robert Willis has been named COO. Willis joins a team of industry professionals from the financial services sector specializing in distressed debt and the residential real estate space. Willis is responsible for expanding the company's reach into the residential mortgage-backed securities market and serving clients' complex needs of providing both homeowner retention strategies and dignified exits for liquidations.

Inventory is shrinking and traffic for homebuyers seems to be increasing, but according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, home prices were down in March. One reason for this, according to the survey, which includes about 2,500 real estate agents, is the high number of distressed properties - short sale properties in particular - on the market. Prices for damaged REO properties saw a 5.7 percent decline in prices between March 2010 and March 2011, according to the survey, while move-in ready REO prices fell 2.5 percent during the same period. Prices on short sales, however, dropped 14.3 percent during the one-year period.

Pursuing a short sale is often thought of as a painstaking process, and it's not uncommon to hear of complaints about slow responses from banks and last minute rejections on offers. Fortunately, not all lenders/servicers are the same when it comes to dealing with short sales, and RealtyTrac compiled a list of data revealing which institutions seem to move through the process quicker and for less. Fannie Mae, Freddie Mac, and FHA had the shortest timelines at 193 days in January 2012, a decrease compared to a year ago in January 2011, when short sales averaged 248 days. The short sale timeline includes the time a property starts the foreclosure process to the time it's sold as a pre-foreclosure property.

With the number of short sales increasing and even outnumbering REO sales in certain states, experts are speculating short sales might become key to preventing an even greater swelling of foreclosed properties on the market. Compared to a year ago in January 2012, pre-foreclosure sales, which are typically short sales, increased 33 percent, according to a RealtyTrac report released Thursday. Short sales even outpaced bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey.

Data through March 2012, released this week by S&P Indices and Experian showed that, with the exception of bank cards, all consumer loan types saw a decrease in default rates for the third consecutive month and in March, posted their lowest rates since the end of the recent economic crisis. The first mortgage default rate decreased to 1.88 percent in March, according to the agencies' report. Second mortgage defaults declined to 1.03 percent over the same period.