LPS Data Shows GSE Foreclosure Starts Are Accelerating

""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com are beginning to initiate foreclosures at a faster pace.
[IMAGE] According to a new study from ""Lender Processing Services"":http://www.lpsvcs.com (LPS), GSE foreclosure starts have been accelerating and are currently at all-time highs. From May to June, foreclosures initiated by Fannie and Freddie jumped 21 percent.

The GSEs’ prime borrowers are performing the worst. Foreclosure rates among the agencies’ prime loans have soared nearly 400 percent since January 2008, with a notable hastening tracked over the last two months, LPS reports. That increase is second only to the swell seen in non-agency “jumbo” mortgages, for more than $729,750.

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LPS says the recent momentum in GSE foreclosure starts coincides with Home Affordable Modification Program (HAMP) cancellations, with most of the volume concentrated in the very late stages of delinquency (six-plus months).

The latest ""HAMP statistics"":http://www.financialstability.gov/docs/June%20MHA%20Public%20REVISED%20072610.pdf from the Treasury showed an extremely elevated number of cancellations from trial plans, as many borrowers who received temporary modifications have not been able to verify their income or have missed trial payments.

As of the end of June, 520,814 HAMP trials had been cancelled â€" more than have been converted to permanent status. In addition, 8,823 permanent modifications have been cancelled under the federal program.

In contrast, LPS says foreclosure starts have remained relatively stable over the last several months for the rest of the industry. The company puts the overall foreclosure rate as of the end of June at 3.65 percent, but notes that foreclosure inventories are still elevated.

According to LPS’ market data, total foreclosure starts for 2010 are at 1,456,000. That stat is lower than 1,682,000 for the same period in 2009, but up from 1,245,000 in the first half of 2008.