July 7, 2010
Not only are sales slowing after the expiration of the homebuyers' tax credit, mortgage delinquencies appear to be on the rise, according to the May "Mortgage Monitor" from Lender Processing Services (LPS).
In its latest report, LPS says delinquencies and foreclosures remain stable, but elevated compared with historical levels.
Though the increase is not unexpected, it comes amid growing concern that housing could take a "double-dip" and not help propel the economy to a full recovery. Early-stage delinquencies have risen as the seasonal improvement period has expired.
In May, first-time 60-day delinquencies declined from the extreme levels of 2009, but with higher percentages remaining in serious delinquent status after 12 months. Cure rates -- most notably, early-stage cures -- have dropped back down to the levels experienced over the prior two years, though higher percentages are remaining current in the immediate term post-cure.
Rising forclosures
Foreclosures also remain a significant factor in the market. Foreclosure starts increased slightly in May with the total for the year still significantly higher than experienced in 2008. Foreclosure sales declined from historic highs but, as with all other delinquency statistics, still remain elevated.
On the positive side, the report shows that modification activity remains high with performance improving by vintage of the loan modification.
There was also a small increase in new loans in May, but the overall total remains very low, viewed as a percentage of total active loans. Loan activity was much stronger in some parts of the country than others.
With the sharp increase in 30-day delinquencies, the overall delinquency rate is now 9.2 percent. The LPS report suggests the trend is moving higher, not coming down as industry analysts hoped.
