On the heels of a record quarter in home price declines
, homeowners continue to slip underwater on their mortgages and fall increasingly delinquent on payments.
The trends are not stopping at Q109, with April recording steep delinquencies to start off Q209.
Total mortgage delinquencies rose slightly in April to 8.1%, according to a monthly report
published by Lender Processing Services (LPS)
. The figure represents a 2.8% increase from March and is up 43% from the same time last year.
New delinquencies rose again in April, while the volume of loans moving to a more delinquent status has increased in each category: current to 30-days delinquent, 60-days delinquent to 90-days delinquent, and 90-days delinquent to foreclosure. In April, the percentage of loans rolling from current to 30-days delinquent is higher than in the same month during the preceding four years.
The roll rate of loans moving through these delinquency categories is a key indicator of future foreclosure starts. LPS found that foreclosure inventories continue to climb in April as foreclosure moratoriums at the government-sponsored enterprises and private foreclosure freezes expire.
The month closed with a 2.7% foreclosure rate, experiencing a month-over-month increase of 7.3% and a year-over-year increase of 90.5%. Ginnie Mae foreclosure sales spiked in April to the highest level in six months. Vintage delinquency analysis shows loans originated in '09 are performing better in early payment stages than loans originated during the last five years performed during the same time frame.
Seven states -- Delaware, Maine, New Mexico, North Carolina, North Dakota, New York and Washington -- experienced an increase in foreclosure starts. Foreclosure starts in New York, which represents 4.5% of all loans in the US, increased by 12.5%. Nationwide, foreclosure starts have increased by 35% in the last 12 months, LPS found.
The high delinquency volumes and pending foreclosures likely inspired loss mitigation efforts like the Administration's Making Home Affordable modification and refinance programs. But even these efforts do not solve all of the delinquency problems, as LPS found that nearly 50% of all modifications had re-defaulted after just six months.
Loan modifications involving reductions in interest rates or unpaid principal balances (UPBs) increase in popularity among servicers, as LPS found an influx in that type of modification. Although modifications involving a UPB reduction experience a recidivism rate 25% lower than other modifications six months post-modification, the percentage of balance reductions remains below 5%.
Write to Diana Golobay