LPS Mortgage Monitor Jan09

7/29/2019 LPS Mortgage Monitor Jan09

1/24

Current Mortgage Performance Observations

January 31, 2009 Performance Data

Prepared as of February 20, 2009


2/24

February 2009 Mortgage Performance Package

Data as of January 31, released Feb 15, 2009Outline / Agenda

Delinquency and Foreclosure overall industry perspective for January 2009.

Focus on Jumbo Prime deterioration: Product Market share comparison by count vs. balance with a focus on Jumbo prime deterioration

Putting the problems in context

Foreclosure starts and inventories vs. foreclosure sales / completions: Where is the impact of

foreclosure preventions efforts?

Update on recidivism rates for modified loans.

State focus: Overview of foreclosure inventory and timeline trends for selected states.

A return to prepayments: Prepayment rates have increased significantly over the last couple months. Isit helping the borrowers who need it?

Roll rates and bankruptcies: Looking past the top level delinquency figures.

Lender Processing Services 2


3/24

Total delinquency leveling off in January but increasing despite seasonality effect

January Total Delinquencies = 8.40%Month over Month Increase of 1.16%, Year over Year Increase of 46.18%

3


4/24

Foreclosure inventories continue to trend upward across all products

January 09 Foreclosure Rate = 2.06%

4


5/24

Foreclosure starts continue to increase across product types over the past several

months in spite of moratoria and mitigation.

- ,most of any product

5


6/24

Foreclosure inventory pace of growth is highest for Jumbo Prime and Option ARMs

6


7/24

Even over a shortened time horizon, acceleration of deterioration in Jumbo Prime

7


8/24

New Origination Jumbo Prime are underperforming Agency product despite higher

FICOs and comparable interest ratesQ3 2008: FICO = 761 Jumbo vs. 748 FN/FH, Interest Rate = 6.14 Jumbo vs. 6.20 FN/FH



9/24

Distributions display the disproportionate impact of the Non-Agency Jumbo Prime and

Option ARM Product. However, despite high rates of deterioration Non-agency jumboprime delinquencies remain relatively low.



10/24

Headline foreclosure percentage reductions are focused on foreclosure sales where the

.



11/24

The trend for Foreclosure starts remains higher and in the case of FNMA and FHLMC

.



12/24

As a result, foreclosure pre-sale inventories continue to rise



13/24

Seasonality may be positively impacting 30 and 60 day defaults. However, the record

levels of new DQs from November are just now nearing foreclosure and new DQs(Current to 30 rolls) have been 500,000+ for six months.

13

Loan counts are based on LPS Applied Analytics Servicing Database of over 34 mill ion mortgages.


14/24

14

Volume of Modifications based on data compiled by LPS Applied Analytics for the HOPE NOW Alliance.


15/24

15


16/24

Florida foreclosure inventories are extremely high and continue to increase.

, .



17/24

National Foreclosure Timelines have increased from 133 days in January to 194 days in



18/24

When viewed as a factor vs. January 2008, National Foreclosures have increased

almost 150%. California and Florida have increased more or less in-line with thenational average.



19/24

Lower rates and increased refinances are manifesting with a return to higher

. .



20/24

However this wave of refinances is impacting only borrowers who are current on their

.



21/24

More loans deteriorated than improved in each of the last ten monthsBetter rates include loans improved through pay-offs and modifications.Worse rates are held artificially low by moratoriums in foreclosure sales.

21


22/24

Thirty Day and Sixty Day Loans continue to show declining rates of cures to an

.



23/24

Interesting trend in bankruptcies as it appears that more are occurring on currentloans, pointing to potential problems down the road not reflected in the current

delinquency rates.



24/24

Conclusions: January 2009 Month-end data

Overall Delinquencies continue to increase, achieving another all-time high. Relative short termstabilization at current hi h levels is not viewed as a ositive articularl since seasonalit shouldbe lowering rates.

Headline improvements in foreclosure rates refer only to sales. Foreclosure starts and inventoriescontinue to increase despite moratoria and loss mitigation efforts.

Recidivism rates show no signs of improvement in the quality of modifications during the fourthquarter of 2008.

In prior reports, the deterioration in the Alt-A dominated 5/1 hybrid product has been an area offocus. This month we turn to the most traditionally reliable product jumbo prime.

Though it should be noted that delinquency rates remain relatively low in comparison, over the last12 months the rate of deterioration in jumbo prime has exceeded all other product.

Deterioration rates for foreclosures are highest for jumbo prime and Option ARM product.

These two products represent only 6% of outstanding mortgages based on loan count, but 17%based on unpaid principal balance.

Newly originated non-agency jumbo prime loans are performing worse than FNMA and FHLMCoriginations which may be cannibalizing some of the jumbo product through higher loan limits.

Prepayments have increased significantly in January and December, but increase in liquidity isconcentrated most in borrowers who need help least.


Documents

LPS Mortgage Monitor Jan09