The national foreclosure inventory declined by 10 percent from September to November and mortgage origination remains strong, according to the November Mortgage Monitor from Lender Processing Services (LPS).
An analysis of the nation’s residential mortgage data, the Mortgage Monitor analyzes the performance of nearly 40 million loans across the nation’s full spectrum of credit products.
Mortgage Monitor – Foreclosures Down, Loan Origination Strong
Overall, the Mortgage Monitor report found a number of positive developments in the U.S. mortgage markets, particularly in the area of foreclosures and origination:
- As previously stated, the national foreclosure inventory decreased by a sizable chunk from September to November, falling to 3.51 percent of the housing inventory, which is nearly a 10 percent decline.
- LPS did note, though, that foreclosure starts could rebound in the coming months; during that September/November period, the nation’s largest banks were implementing the new foreclosure standards of the massive National Mortgage Settlement from last year, and now that those standards have been implemented, foreclosure starts could pick up again.
- On the origination side of the mortgage markets, LPS found much to be pleased with. Herb Blecher, the senior vice president of LPS, said that today’s borrowers are benefiting mightily from record low interest rates, to the point where the interest rates on new loans are, on average, 1.5 percentage points lower than those of paid-off loans.
- Regarding refinancings, Blecher said the situation is even better, with 2 percent of all U.S. mortgage balances being either prepaid or refinanced in November alone. “This equates to significant potential savings for borrowers,” Blecher said. “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.”
HARP – The New Refinancing Frontier
Another region of the mortgage markets that the Mortgage Monitor report endorsed was that of refinancing, particularly under the government’s Home Affordable Refinance Program, or HARP. Though HARP had been previously plagued by difficult standards that stopped many homeowners from refinancing, LPS’ report said that changes to HARP’s guidelines have allowed more homeowners – approximately 2.6 million loans – to qualify for refinancing, with 50 percent of those borrowers boasting credit scores of 720 or above.