Though fewer loans are being approved, LPS found above-average quality in the latest originations.

The latest Mortgage Monitor from financial firm Lender Processing Services (LPS) was a study in contrasts, showing that though originations continue to decline, the quality of those originations continues to improve.

Originations were down 10.1 percent from November to December, continuing a trend of descension that began in October. During that same period, though, loans also performed spectacularly well.

“Likely a result of tighter lending requirements, 2010-11 vintage originations showed 90-day default rates below those of all other years, going back to 2005,” LPS’ stated in a press release.

Additionally, LPS reported that prepayment activity, which is an indicator of mortgage refinances, was strong with 2008-09 originations, with borrowers of high credit scores and government-backed loans reaping the most benefits from today’s historically-low rates.

On the foreclosure front, LPS reported that there continues to be a divergence in data between judicial and non-judicial states, meaning states that settle foreclosure disputes through the courts and, as a result, take longer to close on distressed properties. For instance, in judicial states, half of all foreclosed homes have not made payments in more than two years, a possible trend toward strategic defaults; meanwhile, in non-judicial states, sales of foreclosed homes were four times higher in December compared to judicial states.

Altogether, LPS found the total U.S. delinquency rate at 8.15 percent in December, which was unchanged from November; also, the total U.S. foreclosure pre-sale inventory rate was at 4.11 percent, while monthly, that inventory was down 1.3 percent from November. The states with the highest percentage of non-current loans were Florida, Mississippi, Nevada, New Jersey and Illinois, while the lowest were Montana, Wyoming, South Dakota, Arkansas and North Dakota.