JACKSONVILLE, Fla.,
Oct. 7, 2013 /PRNewswire/ -- The
August Mortgage Monitor report released by Lender Processing
Services (NYSE: LPS) found that prepayment activity (historically a
good indicator of mortgage refinance activity) declined sharply in
August as mortgage rates continued to rise. In conjunction with
those rate increases, a large portion of borrowers has been
effectively shifted out of the "refinancible" population. However,
at the same time, according to analysis done by LPS, rising home
prices and corresponding levels of equity for many borrowers may
translate into opportunity for the home equity loan and lines of
credit market.
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"We have seen prepayments decline by more than 30 percent since
May, when mortgage interest rates began climbing approximately 100
basis points to where we are today," LPS Senior Vice President
Herb Blecher said. "As a result, the
percentage of borrowers currently in loans with interest rates high
enough for refinancing to make fiscal sense has decreased
significantly. Over half of borrowers are now 'out of the money'
with respect to refinancing. In December
2012, the population of potentially refinance-eligible
borrowers stood at roughly 10 million. However, refinance activity
during that time, along with rising interest rates, have shrunk
that pool to just 5.7 million borrowers as of August.
"While higher interest rates may certainly have the effect of
tamping down refinance activity, they may actually wind up
contributing to a new appetite for home equity loans among
homeowners," Blecher continued. "After bottoming out at the
beginning of 2012, home prices are now at their highest levels
since 2009, and borrowers who bought or refinanced within the last
few years are quite likely to have accumulated additional equity in
their homes. Based upon LPS' analysis of historical borrowing
patterns and home value trends, it is possible that we could see an
increase in second-lien borrowing among those who have locked in
their first mortgages at very low rates and who wish to tap their
equity without refinancing into a higher rate."
This month's Mortgage Monitor also looked at foreclosure
pipelines at both the national and state levels. Though national
pipelines have been steadily decreasing due to both an increase in
foreclosure sales and declining foreclosure starts, pressure is
still growing or extreme in many states. New York, a judicial state, still has the
largest pipeline ratio based on the very limited volume of current
foreclosure sales in that state, but certain non-judicial states
have seen dramatic increases in the wake of passing
foreclosure-related legislation or rulings. California, for example, has seen its pipeline
ratio increase nearly 70 percent since that state's Homeowners Bill
of Rights went into effect at the beginning of this year. Likewise,
Massachusetts has seen an increase
of 136 percent (to 168 months) since a Q2 2012 state Supreme Court
ruling slowed the process significantly there.
As reported in LPS' First Look release, other key results from
LPS' latest Mortgage Monitor report include:
Total U.S. loan
delinquency
rate:
|
6.20%
|
Month-over-month
change in delinquency rate:
|
-3.31%
|
Total U.S.
foreclosure presale inventory rate:
|
2.66%
|
Month-over-month
change in foreclosure presale inventory
rate:
|
-5.74%
|
States with highest
percentage of non-current* loans:
|
FL, MS, NJ, NY,
ME
|
States with the
lowest percentage of non-current* loans:
|
MT, CO, WY, SD,
ND
|
|
|
*Non-current totals
combine foreclosures and delinquencies as a percent of active loans
in that state.
|
Totals are
extrapolated based on LPS Data & Analytics' loan-level database
of mortgage assets.
|
To view the Mortgage Monitor Snapshot series, LPS' video version
of the Mortgage Monitor, click here.
About the Mortgage Monitor
LPS manages the nation's
leading repository of loan-level residential mortgage data and
performance information on nearly 40 million loans across the
spectrum of credit products. The company's research experts
carefully analyze this data to produce a summary supplemented by
dozens of charts and graphs that reflect trend and point-in-time
observations for LPS' monthly Mortgage Monitor Report. To review
the full report, click here.
About Lender Processing Services
LPS (NYSE: LPS)
delivers comprehensive technology solutions and services, as well
as powerful data and analytics, to the nation's top mortgage
lenders, servicers and investors. As a proven and trusted partner
with deep client relationships, LPS offers the only end-to-end
suite of solutions that provides major U.S. banks and many federal
government agencies the technology and data needed to support
mortgage lending and servicing operations, meet unique regulatory
and compliance requirements and mitigate risk.
These integrated solutions support origination, servicing,
portfolio retention and default servicing. LPS' servicing solutions
include MSP, the industry's leading loan-servicing platform, which
is used to service approximately 50 percent of all U.S. mortgages
by dollar volume. The company also provides proprietary data and
analytics for the mortgage, real estate and capital markets
industries. Lender Processing Services is a Fortune 1000 company
headquartered in Jacksonville,
Fla. For more information, please visit www.lpsvcs.com.
SOURCE Lender Processing Services, Inc.