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Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.

Delinquency Improves, REOs Tumble

5.48% residential delinquency in March

April 30, 2009

By staff

As residential delinquency declined 9 basis points last month, foreclosures completed on prime mortgages sank -- though new filings rose. Conforming, prime and government mortgages accounted for 84 percent of all delinquent mortgages. First-payment defaults were far higher on portfolio loans than on agency loans -- reflecting disparity in credit scores.

Residential delinquency of at least 60 days on U.S. mortgages was 5.48 percent at the end of last month, HOPE NOW reported today. Late payments fell from 5.57 percent at the end of February but were higher than 5.23 percent at the end of the fourth quarter and 3.20 percent a year earlier.

HOPE NOW's 27 members serviced approximately 38.7 million loans as of March 31, including 32.9 million prime mortgages and 5.8 million subprime loans. The group's servicing portfolio accounted for 85 percent of all U.S. residential mortgages.

Extrapolating HOPE NOW's data to all U.S. loans, there were 53.5 million residential mortgages outstanding at the end of last month, including 47.0 million prime loans and 6.5 million subprime mortgages.

Prime delinquency fell to 3.84 percent in March from the prior month's 3.89 percent, while subprime late payments declined to 17.45 percent from 17.77 percent.

Based on unpaid principal balances, agency prime mortgages accounted for 52 percent of all delinquent loans -- excluding foreclosures -- as of March 31, according to the LPS Mortgage Monitor April 2009 Mortgage Performance Observations released this week from Lender Processing Services. Government share of delinquent loans was 17 percent, while non-agency jumbo prime represented 10 percent and Alt-A made up 6 percent. Subprime, option-ARM and non-agency conforming each accounted for 5 percent.

LPS noted that first-payment defaults last year were highest on portfolio mortgages -- at more than 6 percent. In contrast, early defaults on agency loans were below 1 percent. Driving the higher activity were lower credit scores; weighted average credit scores on portfolio loans fell to below 730 by the end of last year, while conforming credit scores have risen to nearly 760.

First-quarter foreclosures started were 750,000, jumping more than one-third from the fourth quarter's 557,000 and 528,000 a year earlier, HOPE NOW reported. During just March, 290,000 foreclosures were started, up from February's 243,000 and 179,000 a year earlier.

Prime foreclosures started in March were 189,000, jumping from 157,000 the previous month. Foreclosures were started on 100,000 subprime mortgages last month, higher than February's 86,000.

Foreclosures were completed on 208,000 properties in the first quarter, up from the prior period's 205,000 and the prior year's 203,000.

But for just last month, foreclosures were completed on 53,000 properties, sinking from 87,000 in February and 66,000 during March 2008.

The improvement in REO filings reflected temporary foreclosure moratoriums implemented by major institutions in anticipation of the Obama administration's federal modification program -- Home Affordable Modification.

"Foreclosure sales dropped significantly due in large part to the reinstatement of the Federal Housing Finance Agency moratorium on Feb. 13 which continued through the end of March," LPS said in its report.

March real estate owned filings for prime mortgages were 28,000, just half of the prior month's 56,000, HOPE NOW said. Subprime REOs dropped to 25,000 from 32,000.

Prime mortgages represented 52 percent of the inventory of foreclosed properties, while government share was 17 percent, according to the LPS report. Subprime, non-agency conforming and option-ARM loans each accounted for 5 percent, and Alt-A share was 6 percent. But non-agency jumbo prime mortgages represented 10 percent of the foreclosure inventory.

HOPE NOW said U.S. servicers completed 742,000 first-quarter workout plans, climbing from the prior period's 672,000 and 485,000 in the same period a year earlier. Looking only at March, workouts climbed to 249,000 from 244,000 in February and 154,000 in March 2008.

March workouts included 134,000 modifications, the same as the prior month. Formal repayment plans rose to 115,000 from 111,000.

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