Jacksonville, Florida-based Lender Processing Services (LPS) says foreclosure starts have increased to their second highest level since the company began keeping records in 1992. LPS released its June Mortgage Monitor Report last week, which provides mortgage industry performance indicators based on data collected as of May 31.
LPS’ analysis shows that foreclosure starts in May increased 4.3 percent. Based on LPS’ market data, rising foreclosures can be attributed to a larger number of states than the typical Sun Belt culprits. The company said Nevada, Florida, Arizona, California, Maryland, Michigan, Hawaii, Georgia, Rhode Island, and New Jersey all posted foreclosure starts above the national average, with the states of Washington, Illinois, and Maryland experiencing the largest percentage increases.

Total mortgage delinquencies also rose in May, to 8.49 percent, according to LPS’ study. That figure represents a 5 percent increase over April and a 50 percent year-over-year climb. The LPS Mortgage Monitor also shows that the quality of loan originations has been improving, with 2009 delinquency curves well below prior years. With more attention focused on improved credit scores, lower LTV ratios, income, and documentation, LPS says overall loan vintage quality has escalated.
Based on LPS’ research, the number of newly delinquent loans reached 637,822 last month. Roll volumes, which reflect loans moving to a more delinquent status (for example, moving from 30 days to 60 days delinquent), increased month-over-month, with the exception of loans moving from 60 to 90 days delinquent, perhaps signaling that more workouts are being completed for homeowners that are at the brink of foreclosure. But the April-to-May 2009 time period marks the first significant increase in loans rolling from current to 30-days delinquent in five years.
LPS said the success rate for loss mitigation-related loan modifications continues to hover in the 30 to 40 percent range, with a higher success rate for loan modifications involving a reduction in unpaid principal balance.
LPS’ monthly Mortgage Monitor Report is derived from analysis on the company’s repository of loan-level residential mortgage data and performance information from more than 40 million loans across the spectrum of credit products. Approximately 50 percent of all U.S. mortgages are serviced using LPS’ Mortgage Servicing Platform (MSP). Eight of the nation’s top 10 servicers and 14 of the top 20 rely on the company’s MSP.