LPS Mortgage Monitor October 2012 Mortgage Performance Observations Data as of September, 2012 Month-end Lender Processing Services 1 ONE SOURCE. POWERFUL SOLUTIO ONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
September 2012 Data Dashboard Lender Processing Services 2
September 2012 Highlights Delinquency Increase Attributes and causes Origination Increase HARP Activity and Opportunity Judicial vs. Non-judicial Foreclosures Pipeline and impact Lender Processing Services 3
DQs up 7.7% for the month; largest monthly increase since 2008 Increase came from early stages (Appendix, slide 18): 30 Day DQs increased from 1.37mm to 1.59mm 90 Day DQs increased from 1.52mm to 1.53mm DQs Down 30% from Peak Lender Processing Services 4
First time delinquencies increased by about 200k (in-line with repeats) 16% of current to 30 rolls were re-defaulted modifications vs. 17% in August Lender Processing Services 5
Payment / transactional activity was down across the board in September Number of Business Days September: 19 August: 23 2012 Average (ex Sep): 21.25 Foreclosure starts -21% M/M (Appendix, slide 20) Foreclosure sales -18% M/M (Appendix, slide 20) Delinquent ent cures -25% M/M (Appendix, slide 23) Prepayment rates -13% M/M(Appendix, slide 24) Lender Processing Services 6
New problem loan rates maintained seasonal increase in September Lender Processing Services 7
Delinquency Increase Summary Points Payment / transaction activity down Seasonality pressures No impact observed from re-defaulted d mods Longer term trend is still down One month of activity could be anomaly, monitoring the longer term trend Delinquencies 30% lower than Jan-10 peak Watch delinquency migration and cure rates next month Lender Processing Services 8
August originations at the highest level since 2009 Lender Processing Services 9
HARP originations still on the rise Lender Processing Services 10
HARP eligible population may still be over 3 million loans 63% of 2005 and earlier current and in the money loans are GSEs HARP Eligible: GSE, Originated pre-5/09, CurrLTV > 80, No missed prior 6 and <= 1 missed in prior 12 In the Money : Interest Rate > 4.5% Lender Processing Services 11
Originations and HARP Increase Summary Points Originations at the highest level since 2009 due to persistent low rates and increased HARP activity There is still a large potential HARP eligible population Large in-the-money market still exists (potential ti HARP 3.0 refinancing?) i Lender Processing Services 12
FC inventory in judicial states remains almost 3x non-judicial Seven of the top 10 states for total non-current are judicial (Appendix, slide 19) Lender Processing Services 13
Judicial pipeline ratio is twice nonjudicial; several states still extreme Lender Processing Services 14
Loss mitigation activity is similar in both judicial and non-judicial states Lender Processing Services 15
Judicial vs. Non-judicial FC Disparity Summary Points Large differences persist in judicial and non- judicial foreclosure timelines and inventory over-hang hang. No associated impacts/divergence noted in other statistics thus far: Similar loss mitigation activity Similar il new problem loan rates Similar origination activity / interest rates Lender Processing Services 16
LPS Mortgage Monitor October 2012 Appendix Data as of September, 2012 Month-end Lender Processing Services 17 ONE SOURCE. POWERFUL SOLUTIO ONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
The September increase in delinquencies impacted early stages Lender Processing Services 18
Seven of the top 10 states for total non-current are judicial Average year over year change in non-current percent (includes loans 30+ Delinquent or in Foreclosure) Judicial =0.4% Non-judicial =-4.7% Lender Processing Services 19
FC starts at lowest since September 2007, Sales 2nd lowest in 19 months Lender Processing Services 20
Decline in foreclosure starts supported a drop in overall inventory Lender Processing Services 21
First time foreclosure starts at the lowest level since 2008 Lender Processing Services 22
Cure counts are down sharply for early stage delinquencies Lender Processing Services 23
September prepayment rates dropped from August Lender Processing Services 24
LPS Mortgage Monitor Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions Lender Processing Services 25 ONE SOURCE. POWERFUL SOLUTIONS. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
Disclosure Page: Product Definitions *Conforming limits do not account for temporary or high-cost area increases. Lender Processing Services 26
Disclosure Page: Metrics Definitions Total Active Count: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total active count. Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquent. 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month. Foreclosure Inventory: The servicer has referred the loan to an attorney for foreclosure. Loans remain in foreclosure inventory from referral to sale. Foreclosure Starts Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month. Non-Current: Loans in any stage of delinquency or foreclosure. Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that moves into post-sale status or is flagged as a foreclosure liquidation. REO: The loan is in post-sale foreclosure status. Listing status is not a consideration, this includes all properties on and off the market. Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving. Lender Processing Services 27
With the June 2012 month-end data, LPS has updated its extrapolation methodology to incorporate, among other things, improved estimates of market size, which includes higher h coverage of government and subprime products and increases LPS estimate of the total first lien residential mortgage market by three percent to 50.4 million. To ensure consistency in trend analysis, the new methodology has been applied to all historical data and previously reported mortgage performance statistics have been adjusted accordingly. The following section contains information on market coverage and comparisons with previously reported statistics. Additional information is available upon request. Lender Processing Services 28
The new scaling increases overall estimated industry loan count by approximately 1.2 million loans Prior industry estimates declined because scaling didn t support current servicing transfer volumes Lender Processing Services 29
New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers Lender Processing Services 30
Delinquencies decline based on higher estimated coverage of FHA and subprime loans. Converge due to new servicers and transfer issues with prior scaling Lender Processing Services 31
Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired Lender Processing Services 32
Foreclosure starts remain consistent, with rates shifting up slightly Lender Processing Services 33
Performance Statistics Changes: Database Counts Lender Processing Services 34
Performance Statistics Changes: State Level Detail Lender Processing Services 35