Find the home of your dreams moments after it's listed - Not after it's sold!

Foreclosure Starts Hit Record High For Fannie, Freddie Loans

The number of homeowners missing their first payment on their mortgage ticked down slightly from May to June, but the total number of loans in some stage of the foreclosure process remained essentially flat at nearly 2 million, according to statistics collected by Lender Processing Services.

Among all loans, 30-day delinquencies were down 1.4 percent from May, to 1.81 million, while 60-day delinquencies rose 2.4 percent to 766,158. LPS data showed declines in both 90-day delinquencies (down 3.9 percent to 2.59 million) and loans in foreclosure (down 0.4 percent to 1.97 million).

The total number of non-current loans fell 1.7 percent from May to June, to 7.14 million, up from 6.9 million at the same time a year ago.

In releasing number for June, LPS said foreclosure starts among loans guaranteed by Fannie Mae and Freddie Mac have been accelerating and are currently at all-time highs.

Foreclosure starts are accelerating along with Home Affordable Modification Program (HAMP) cancellations, LPS said, with most of the increase and volume concentrated loans that were delinquent by six months or more.

Among homes in foreclosure, homeowners were behind on their payments by 461 days on average, up from 343 days at the same time a year ago and 274 days in June 2008.

In releasing its latest Mortgage Monitor report, LPS announced changes in the assumptions it makes when extrapolating the figures it gathers from loan servicers in order to get an idea of what’s happening among all active loans.

While LPS had previously estimated that servicers were providing the company with data on 70 percent of all loans, it now estimates the coverage ratio to be slightly smaller — 66.8 percent.

The reduction in the estimated coverage ratio means that there are probably more active loans than LPS had previously estimated — 54.2 million in May, rather than the 51.6 million previously estimated — and also more non-current loans.

LPS had previously estimated that there were 6.26 million non-current loans in May, including 1.7 million loans in foreclosure. Using the new extrapolation rates, LPS now estimates that there were nearly 7.3 million non-current loans in May, including 1.98 million loans in foreclosure.

LPS said its coverage ranges from 38.5 percent of subprime loans, to 70 percent for prime loans guaranteed by Fannie Mae and Freddie Mac, and 82.8 percent for non-agency jumbo prime loans. Statistics gathered from loan servicers on
each loan type are extrapolated accordingly.

When the changes are applied historically to data going back to January 2008, the numbers paint the same overall trend: a steady rise in non-current loans that plateaued briefly in early 2009 before peaking in January 2010 and falling sharply in February and March.

In another change in the June Mortgage Monitor report, LPS did not release an estimate on the number of homes in lenders’ real estate-owned (also known as bank-owned or REO) inventories.

Last month, LPS estimated that lenders had 1.13 million REO properties on their hands, roughly the same as April, but up 21.2 percent from a year ago.

The June Mortgage Monitor includes a definition of REO properties — listing status is not a consideration, and the number is supposed to include all properties in lenders’ hands whether they are on the market yet or not — but no estimate for REO inventory.

LPS also said that before March 2009 it assumed it was getting data on 40 percent of REO properties from loan servicers, and that after that it had made an adjustment for “under-reporting by a specific client.”