Lender Processing Services, Inc. (LPS), recently announced the release of its August 2009 LPS Mortgage Monitor. The LPS Mortgage Monitor is a report of mortgage industry performance indicators based on data collected through July 2009. LPS’ analysis of the nation’s loan inventories shows mixed results. Though total delinquencies remained unchangedfrom 8.6 percent as of June 2009, the figure represents a 40 percent year-over-year increase and is the highest loan delinquency level recorded by the company. Continuing their climb to record highs, foreclosure inventories showed a month-over-month increase of 4.2 percent and a year-over-year increase of 89.6 percent. Jumbo prime, option adjustable-rate mortgages (ARMs) and non-agency conforming prime loans continue to

experience the highest deterioration rates. Jumbo prime foreclosure rates are up 634 percent from January 2008. LPS also reported that the national rate for total non-current loans increased slightly over June to 11.6 percent, representing a 50 percent year-over-year increase. Foreclosure starts increased 7.1 percent, to their second highest level on record, and the nation’s loan deterioration ratio – the number of loans deteriorating versus improving – is approximately 2.2 to 1. Deterioration rates are highest in the western and northeastern regions of the country. Ninety-day or greater delinquent loans rolling towards foreclosure status have decreased from 2007 and 2008 levels. However, those loans not referred into foreclosure continue to roll to the next stage of delinquency showing that the volume of at-risk loans is worsening. Meanwhile, the absolute volume and percentage of foreclosure starts relative to the total number of active loans continues to increase as well. LPS did report one bit of positive news. The re-default rates for loan modifications in the first and second quarter of 2009 are outperforming those initiated during 2008 in the initial months post modification. In spite of this, the report noted that while loan performance is improving, the mortgage market’s problems will remain until the nation’s sizable foreclosure pipeline is cleared through refinances, loss mitigations, or REO sales.