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June 2013 Mortgage Performance Observations; Data as of May, 2013 Month
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LPS Mortgage Monitor
June 2013 Mortgage Performance Observations
Data as of May, 2013 Month-end
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• Focus 1: Delinquency trend improvement
with new problem loan update
• Focus 2: Home price advances and
negative equity impact
• Focus 3: Originations, attributes and loan
prepayment activity
June 2013 Focus Points
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• Delinquencies continued to decline in May;
largest year-to-date drop since ’02
• Improvement supported by low new problem
loan rates that now approach the pre-crisis
average
• Prime delinquencies have experienced the
greatest decline since the Jan-10 peak;
down 40-50%
Focus Point 1: DQ trend improvement
with new problem loan update
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DQs down over 15% since Dec ‘12;
largest year-to-date drop since ‘02
May-13 vs. ‘95-’05 average
Delinquencies 1.4x
Foreclosures 5.7x
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New problem loan rates continue to
decline towards pre-crisis average
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Prime delinquencies are down
40-50% from Jan-10 peak
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While volumes have declined, serious
DQ inventories continue to age
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• Equity status continues to be a strong driver
of new problem loan rates
• Home prices increase continued as of the
latest data; up over 8% year over year
• Improvement in home prices has lowered
national negative equity rates to below 15%
Focus Point 2: Home price advances
and negative equity impact
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Equity status continues to drive new
problem loan rates
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Home prices have increased
over 8% since April 2012
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Negative equity percentage has
dropped below 15% nationally
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Distressed sales ~23% of total for
2013; lowest levels since ‘08
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• 2013 origination activity remained strong
through April
• Prepayment rates indicate higher May
refinance activity despite increased rates
• Recent vintages continue to display pristine
credit quality and performance
Focus Point 3: Originations, attributes
and loan prepayment activity
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Strength in 2013 originations
continued through April
2005 2006 2007 2008 2009 2010 2011 2012 2013
Count 13.1M 11.2M 9.1M 6.7M 8.3M 7.2M 6.4M 8.8M 3.2M
(thru Apr)
% Gov 52% 52% 69% 87% 91% 89% 87% 84% TBD
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Prepayments indicate higher May refi
activity despite increased rates
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Recent vintages continue to display
pristine credit quality & performance
The weighted
average credit
score for 2013
originations is
754
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LPS Mortgage Monitor
June 2013 Appendix
Data as of May, 2013 Month-end
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May 2013 Data Summary
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Seven of the top 10 states for total
non-current are judicial
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Loan counts and
average days delinquent
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LPS Mortgage Monitor
Disclosures: Product / Metric Definitions and
July 2012 Market Sizing Revisions
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Disclosure Page: Product Definitions
*Conforming limits do not account for temporary or high-cost area
increases.
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Disclosure Page: Metrics Definitions
• Total Active Count: All active loans as of month-end including loans in any state of
delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total
active count.
• Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using
the MBA methodology based on the payment due date provided by the servicer. Loans in
foreclosure are reported separately and are not included in the MBA days delinquent.
• 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and
were 90 days delinquent, but not in foreclosure, in the current month.
• Foreclosure Inventory: The servicer has referred the loan to an attorney for
foreclosure. Loans remain in foreclosure inventory from referral to sale.
• Foreclosure Starts – Any active loan that was not in foreclosure in the prior month that
moves into foreclosure inventory in the current month.
• Non-Current: Loans in any stage of delinquency or foreclosure.
• Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that
moves into post-sale status or is flagged as a foreclosure liquidation.
• REO: The loan is in post-sale foreclosure status. Listing status is not a consideration,
this includes all properties on and off the market.
• Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency
status vs. those improving.
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With the June 2012 month-end data, LPS has updated its
extrapolation methodology to incorporate, among other
things, improved estimates of market size, which includes
higher coverage of government and subprime products and
increases LPS’ estimate of the total first lien residential
mortgage market by three percent to 50.4 million.
To ensure consistency in trend analysis, the new
methodology has been applied to all historical data and
previously reported mortgage performance statistics have
been adjusted accordingly.
The following section contains information on market
coverage and comparisons with previously reported
statistics. Additional information is available upon request.
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The new scaling increases overall estimated industry
loan count by approximately 1.2 million loans
Prior industry estimates declined
because scaling didn’t support
current servicing transfer volumes
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New scaling reflects the higher coverage of government
loans and allows for the incorporation of new servicers
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Delinquencies decline based on higher
estimated coverage of FHA and subprime loans.
Converge due to new
servicers and transfer
issues with prior scaling
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Foreclosure inventory remains almost identical, but
shifts up in recent months as transfer bias is repaired
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Foreclosure starts remain consistent, with
rates shifting up slightly
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Performance Statistics Changes: Database Counts
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Performance Statistics Changes: State Level Detail