Thread: 30% Loans in Foreclosure no Payment in Over 2 Years

Tuesday, March 29, 2011 4:57 AM

March LPS Mortgage Monitor Report: 30% of Loans in Foreclosure have not made a Payment in Over 2 Years

Inquiring minds are reading the March 2011 LPS Mortgage Monitor. http://www.lpsvcs.com/NewsRoom/Industry ... ry2011.pdf

There is a bit of good news in the report. Delinquent and Non-Current Rates are improving. However, the rates are still exceptionally high historically. Also, some of the foreclosure data is skewed by moratoriums and reworked loans.

On the other hand, option ARM foreclosures have increased dramatically over the last six months and 30% of loans in foreclosure have not made a payment for at least two years. 47% of those in foreclosure have not made a payment for at least 18 months.

Charts and Comments from the LPS Report

Delinquencies remain about twice the 1995-2005 average, foreclosure inventories are 7.8 times historical “normsâ€

Foreclosure Backlog Hits 30 Months As Option-ARM Cliff Arrives; Average Delinquency Period 537 Days

Submitted by Tyler Durden
03/29/2011 12:21 -0400
95 comments

Following today's Case Shiller confirmation that housing is due for many more month of pain, a press release from LPS confirms that the pain will be very prolonged, and home prices will declining for a long period of time. http://www.lpsvcs.com/NewsRoom/Pages/20110328.aspx To wit: "The February Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows that while delinquencies continue to decline, an enormous backlog of foreclosures still exists with overhang at every level. As of the end of February, foreclosure inventory levels stand at more than 30 times monthly foreclosure sales volume, indicating this backlog will continue for quite some time. Ultimately, these foreclosures will most likely reenter the market as REO properties, putting even more downward pressure on U.S. home values." That is assuming Banks manage to bribe enough people to allow them to get back to foreclosing on tenants with improper loan docs (something we have no doubt will happen). And possibly far more troubling is that the Option-ARM trap is finally slamming shut: "February’s data also showed a 23 percent increase in Option ARM foreclosures over the last six months, far more than any other product type. In terms of absolute numbers, Option ARM foreclosures stand at 18.8 percent, a higher level than Subprime foreclosures ever reached. In addition, deterioration continues in the Non-Agency Prime segment. Both Jumbo and Conforming Non-Agency Prime loans showed increases in foreclosures and were the only product areas with increases in delinquencies."

There is some marginal good news... for banks:

The data also showed that banks’ modification efforts have begun to pay off, as 22 percent of loans that were 90+ days delinquent 12 months ago are now current. Timelines continue to extend, with the average U.S. loan in foreclosure now having been delinquent for a record 537 days, and a full 30 percent of loans in foreclosure have not made a payment in over two years.

Based on all this, it is surely time for Cramer to have another prophetic call like this one from 2008 http://www.cnbc.com/id/26406036/Cramer_ ... ing_Bottom that housing has finally bottomed.

h/t Credit Trader

http://www.zerohedge.com/article/forecl ... riod-537-d