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LPS Study Finds Pace of Delinquencies Is Slowing

While delinquency rates in the United States continue to reach new highs, the pace of deterioration has slowed, ""Lender Processing Services"":http://www.lpsvcs.com (LPS) said Monday. Still, the Florida-based analytics firm cautioned that the nation's housing ""market remains far from a full recovery"":http://dsnews.comarticles/lps-cautious-of-declaring-recovery-2010-02-25.

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According to LPS' latest ""Mortgage Monitor"":http://www.lpsvcs.com/NewsRoom/IndustryData/Documents/02-2010%20Mortgage%20Monitor/Pres_MM_Jan10Data.pdf report, nearly 7.5 million loans are in some stage of delinquency or foreclosure, with an additional one million properties in REO or post-sale foreclosure.

Despite extraordinary loss mitigation efforts that resulted in the execution of approximately 2 million loan modifications over the last year â€" including the federal government's Home Affordable Modification Program (HAMP) trial periods â€" LPS' data shows that the number of new delinquencies exceeds the number of homes saved by 25 percent. Approximately 2.5 million loans that were current on January 1, 2009, were 60 or more days delinquent of in foreclosure by January 31, 2010.

The nation's pool of problem loans continues to grow, but with loan mod reviews delaying resolution, the foreclosure pipeline has stagnated. According to LPS' study, more than

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31 percent of loans that have been delinquent for six months are not yet in foreclosure, while 22.8 percent of loans delinquent for 12 months have not been moved to foreclosure status. That final figure is up from 9.0 percent in 2008.

LPS also notes that older mortgages now make up a higher proportion of new delinquencies, as more loans experience repeat delinquencies. The average loan age of newly delinquent loans is now 46 months, as compared to an average newly delinquent loan age of 27 months in January 2007. During January 2010, LPS found that 346,000 borrowers became delinquent for the first time, representing approximately 40 percent of all newly delinquent loans for the month.

Nationwide, LPS' data shows that the mortgage delinquency rate is 10.2 percent. Add to that the national foreclosure inventory rate of 3.3 percent, and it means that 13.5 percent of outstanding mortgages in the country aren't current. That's up from 13.3 percent reported in LPS' previous study.

Based on LPS' analysis, the states with the most non-current loans (combining foreclosures and delinquencies) are Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Illinois, Michigan, and Ohio.

States with the fewest percentage of non-current loans include North Dakota, South Dakota, Alaska, Wyoming, Montana, Nebraska, Vermont, Colorado, Oregon, and Washington.

LPS' monthly Mortgage Monitor report is based on data extrapolated from the company's servicing database. LPS manages a repository of loan-level residential mortgage data and performance information from approximately 40 million loans across the spectrum of credit products.