U.S. Foreclosure Inventory at Record Levels in October, Delinquencies Down 30% from Peak

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Based on Lender Processing Services' October Mortgage Monitor report, mortgage delinquencies continue their decline, now nearly 30 percent off their January 2010 peak.

Meanwhile, foreclosure inventories are on the rise, reaching an all-time high at the end of October of 4.29 percent of all active mortgages. The average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.

Judicial vs. non-judicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from state to state, with non-judicial foreclosure inventory percentages less than half that of judicial states. This is largely a result of the fact that foreclosure sale rates in non-judicial states have been proceeding at four to five times that of judicial. Non-judicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in non-current loans percentages.

The October data also showed that mortgage originations are on the rise, reaching levels not seen since mid-2010. Mortgage prepayment rates have also spiked, as much of the new origination is related to borrower refinancing; loans originated in 2009 and later are the primary drivers of the increase. While FHA origination activity is down, GSE and FHA originations still account for the vast majority of all new loans - nearly nine out of every 10 new mortgages.

Key results from LPS' latest Mortgage Monitor report:

• Total U.S. loan delinquency rate: 7.93%
• Month-over-month change in delinquency rate: -2.0%
• Total U.S. foreclosure pre-sale inventory rate: 4.29%
• Month-over-month change in foreclosure pre-sale inventory rate: 2.5%
• States with highest percentage of non-current loans: FL, MS, NV, NJ, IL
• States with the lowest percentage of non-current loans: ND, AK, SD, WY, MT

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