Loan Performance Improves, Foreclosure Starts Down, LPS Reports

Across the board, loan performance improved for February, and foreclosure starts were down compared to the month before in January, according to a report from ""LPS"":http://www.lpsvcs.com/Pages/default.aspx ""Applied Analytics"":http://www.lpsvcs.com/Divisions/AppliedAnalytics/Pages/default.aspx. Despite the decrease in foreclosure starts, foreclosure inventory still remains near historic highs, while delinquency rates are at their lowest level since August 2008, LPS reported.

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Foreclosure starts were down 15.2 percent compared to the previous month, reversing the increase seen during January.

Foreclosure inventory was at 4.13 percent in February, a 0.5 percent monthly decrease, but still remains high. In December 2005, foreclosure inventory was at 0.48 percent.

Foreclosure sales decreased in both judicial and non-judicial foreclosure states, dropping 22 and 15 percent month-over-month, respectively, in February.

Even with the decrease in foreclosure sales, national pipeline ratios - 90-plus delinquencies and foreclosures divided by the 6 month average of foreclosure sales - continued to decline, but still varies by region.

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Once peaking at 123 months in April 2011, the average pipeline ratio in judicial states stood at 84 months in February, compared to 33 months in non-judicial states.

Pipeline ratios continue to be higher in the Northeast, particularly in New York and New Jersey, where average pipelines average 846 and 772 months, respectively. Also, the percentage of inventory more than two years past due remains high due to low foreclosure sales.

The delinquency rate was also down 5 percent on a month-over-month basis and 14 percent on a yearly one. The 90-plus delinquency rate saw a monthly and yearly decline at 1.8 and 8 percent, respectively.

Non-judicial states saw a greater drop in the percentage of non-current loans, as in loans that are delinquent or in foreclosure, with non-judicial states dropping 11.8 percent and judicial states decreasing just 4 percent.

Cure rates for all types of loans, including one-month delinquencies to foreclosure initiated loans, were higher. Additionally, repeat foreclosures decreased 8 percent on a month-over-month basis.

States with highest percentage of non-current loans, or foreclosures and delinquencies were Florida (22.1 percent), Mississippi (17.5 percent), Nevada (15.9 percent), New Jersey (15.9 percent), and Illinois (14.3 percent).

States with the lowest percentage of non-current loans were Montana (6.1 percent), Arkansas (5.4 percent), Wyoming (5.1 percent), South Dakota (5 percent), and North Dakota (4 percent).

LPS manages a repository of loan-level residential mortgage data and performance information on nearly 40 million loans. The company is a provider of integrated technology, services and mortgage performance data ,and analytics to the mortgage and real estate industries.