Mortgage Delinquencies Up Sharply in Areas Hit by Hurricane Sandy, National Delinquencies Down

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According to the November Mortgage Monitor report by Lender Processing Services (LPS), the national foreclosure inventory dropped to 3.51 percent in November, representing an almost 10 percent decline from September 2012, when newly instituted National Mortgage Settlement requirements began to influence the pace of first-time foreclosure starts. As noted in last month's Mortgage Monitor release, LPS expects foreclosure starts to rebound as mortgage servicers incorporate the new procedural requirements into their operations in the coming months.

LPS found mortgage origination activity strong. According to LPS Applied Analytics Senior Vice President Herb Blecher, borrowers are benefiting from today's historically low interest rates. "Comparing interest rates on new versus paid-off loans, we see that interest rates on the former are 1.5 percentage points below the latter," Blecher said. "With prepayment activity being as high as it is - 2 percent of total outstanding U.S. mortgage balances prepaid or refinanced in November alone - this equates to significant potential savings for borrowers. On average, this translates into new loan payments that are approximately $190 less per month than those of borrowers prior to paying off their loans.

"Additionally, after a decline in September related to the shortened business month, HARP-related origination activity is once again near its recorded highs, and we see significant potential for further growth on that front. There are currently approximately 2.6 million loans that fit generalized HARP eligibility requirements, with 50 percent having 'prime quality' credit scores of 720 or above."

The November data also showed that the impact of Hurricane Sandy continued in ZIP codes hit hardest by the storm. While national delinquencies are moving in line with seasonal trends - that is, tending to rise slightly through the remainder of the calendar year - mortgage delinquencies increased sharply in those areas affected by Sandy. Whereas the national delinquency rate has increased 3.7 percent since August of this year, delinquencies in Sandy-impacted ZIPs have risen at more than threefold that pace - climbing 15.4 percent in Conn., 15.2 percent in N.J. and 14.8 percent in N.Y.

Other key results from LPS' latest Mortgage Monitor report include:

• Total U.S. loan delinquency rate: 7.12%
• Month-over-month change in delinquency rate: 1.2%
• Total U.S. foreclosure pre-sale inventory rate: 3.51%
• Month-over-month change in foreclosure pre-sale inventory rate:  -2.84 %
• States with highest percentage of non-current loans: FL, NJ, MS, NV, NY
• States with the lowest percentage of non-current loans: MT, WY, SD, AK, ND