The June Mortgage Monitor report released by Lender Processing Services shows that while overall mortgage prepayment activity remains stable, despite historically low rates, the federal government's Home Affordable Refinance Program (HARP) has seen considerable activity since the beginning of 2012.
The company looked at Fannie Mae and Freddie Mac 30-year fixed-rate loans across a variety of loan-to-value ratios, and since the beginning of 2012, high loan-to-value refinances have increased significantly.
“As an example, 2006 vintage GSE loans with six percent interest rates and LTV ratios between 100 and 125 percent increased from a 10 percent annualized prepayment rate at the end of 2011 to more than 40 percent in June 2012,” said Herb Blecher, senior vice president, LPS Applied Analytics. “Our data also shows that this rise in loan activity extends beyond that subsection — the same type of increase holds true across other vintages with the same characteristics.”
The June data also shows that the rate of new problem loans entering the delinquency pipeline remained stable at multi-year lows; late-stage delinquencies have also shown improvement over the last year, dropping more than seven percent.
On a month-over-month basis, the national delinquency rate for loans 90 or more days delinquent remained stable, but after months of tracking very closely, the rate in judicial foreclosure states is now higher than in non-judicial. The share of aged inventory is higher in judicial states as well, with nearly 50 percent of borrowers with loans 90 or more days delinquent not having made a payment in more than one year, as compared to just slightly more than 40 percent in non-judicial states. Further, nearly 60 percent of borrowers with loans in foreclosure in judicial states had not made a payment in at least two years, as of June.
As reported in the First Look, other key results from the Mortgage Monitor report include:
Total U.S. loan delinquency rate: 7.14 percent
Month-over-month change in delinquency rate: 3.4 percent
Total U.S. foreclosure pre-sale inventory rate: 4.09 percent
Month-over-month change in foreclosure pre-sale inventory rate: -2 percent
States with highest percentage of non-current* loans: Florida, Mississippi, Nevada, New Jersey and Illinois
States with the lowest percentage of non-current* loans: Montana, Alaska, Wyoming, South Dakota, North Dakota.
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Note: Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets.